[wisconsin_cur]

We may be tired of this type of article but here is another.

NYT

$this->bbcode_second_pass_quote('', 'O')il prices, an economic scourge in decades past, have soared to record levels in recent years. But the fallout often seemed negligible: Americans kept spending; employment kept growing; factories, construction crews and retail stores stayed busy.

Now, however, the economy may be starting to sputter as damage from the weak housing market drags down growth. If payrolls drop significantly, will high-price crude oil begin to cause pain in a way that it hasn’t in nearly three decades?

Many economists do not think so, maintaining that if the United States entered a recession, the price of oil would quickly drop.

“The United States is the single largest oil-consuming nation in the world,” said Stephen P. A. Brown, director of energy economics at the Federal Reserve Bank of Dallas. “A slowdown here ought to bring the price of oil down.”

[seldom_seen]

Ahh, I see their logic. We now have record oil prices and a sputtering economy. The sputtering economy though will cause lower oil prices.

So when you boil it down:

High oil prices = Low oil prices

That's cool. What do you think George?

[peasea]

$this->bbcode_second_pass_quote('wisconsin_cur', 'W')e may be tired of this type of article but here is another.

NYT

$this->bbcode_second_pass_quote('', 'O')il prices, an economic scourge in decades past, have soared to record levels in recent years. But the fallout often seemed negligible: Americans kept spending; employment kept growing; factories, construction crews and retail stores stayed busy.

Now, however, the economy may be starting to sputter as damage from the weak housing market drags down growth. If payrolls drop significantly, will high-price crude oil begin to cause pain in a way that it hasn’t in nearly three decades?

Many economists do not think so, maintaining that if the United States entered a recession, the price of oil would quickly drop.

“The United States is the single largest oil-consuming nation in the world,” said Stephen P. A. Brown, director of energy economics at the Federal Reserve Bank of Dallas. “A slowdown here ought to bring the price of oil down.”

[kjmclark]

The thing I thought they missed is the level of recession required to reduce oil demand. That early 80's recession, which is one of the two drops in demand in the 70s/80s, was the worst since the Depression. Those two drops in demand were the only drops in demand since WWII, unless demand is falling right now, which is unclear.

So, to reduce demand as they say, we need a severe recession and CAFE standards increasing. Of course, for the 80's recession, there was much less debt, we didn't have a housing bubble crashing at the time, and we had much less sprawl.

[DantesPeak]

I read the full, hard copy version of the article. PO is'nt mentioned anywhere - in fact supply isn't mentioned anywhere at all.

It seems we are still getting only half the story; usually the higher price of oil is blamed solely on increasing demand from Chinida.

It's one step forward, two steps back for the NY Times. Only a week ago they realized that energy shortages were the root of troubles in the third world.

[Twilight]

A slowdown in the US would bring the price of oil down - if it were the only industrial economy of note. It isn't.

[sicophiliac]

You know I remember back in 2002 and 2003 hearing how the markets were worried about oil breaking 30 dollars a barrel.. then 40. Back in 05 they were saying how 60 dollar a barrel oil was a big concern to the economy.. then 70.. and now 80. That having been said obviously for whatever reason the US economy has held up quite well to the rise in energy prices. I am no economist but some say its due to money flowing in to the US economy from the middle east. Some say its because people are cutting back on driving ect ect. I personally think its both and also because oil was so rediculously cheap back in the 90s that at 50.. 60 or even 70 dollars a barrel is not terribly expensive when factored in for inflation. I mean gas was 1.30-1.50 a gallon around 10 years ago, going with 3% annual inflation that works out to what? low 2 dollar a gallon range now ? With gas around 3 dollars a gallon here right now we can see its price relative to inflation has not yet really surged up that much. Hell I still see lots of full sized SUVs and trucks on the road. The new Toyota Tundra and the new Tahoes and Suburbans are all of the place. Who knows when and at what point oil/gasoline prices will tank the economy. Maybe 80 a barrel will do it, maybe it wont happen till 90 or even 100. Hell the economy could still be rolling at 100 dollars a barrel, maybe investment in renewables and domestic energy will help sustain things. Its anybodies guess.

[Denny]

The argument may make sense if there were expanding discoveries of oil year over year. There aren't. The only trick now to ever see reduced oil prices is if usage can drop faster than discoveries.

As a betting man, I would not take that bet.

[wisconsin_cur]

$this->bbcode_second_pass_quote('Twilight', 'A') slowdown in the US would bring the price of oil down - if it were the only industrial economy of note. It isn't.