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Ethanol-Biofuels Will Oil Prices Tip Us Into a Recession?
Ethanol-Biofuels Will Oil Prices Tip Us Into a Recession?
| Will Oil Prices Tip Us Into a Recession? |
| Written by Miranda Marquit | |||
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Higher gas prices mean households cut back on other spending.
While it may help companies like Exxon (XOM) and Chevron (CVX) down the road, higher oil prices are not likely to help the US economy. In fact, some think that higher oil prices (and the higher gas prices that go with them) might tip the economy into a recession. The International Herald Tribune reports on recession fears sparked by increasing gas prices: The increases could not come at a worse time for the U.S. economy, the world's largest. With growth slowing, high energy prices that were once easily absorbed by consumers are now more likely to drag on household budgets, leaving people with less money to spend elsewhere. ...Indeed, gas prices are leaping to catch up with oil prices that are hitting records. And while Exxon is down today on the stock market, it isn't down by much, and it's been trending higher since Monday. Chevron is gaining right now. In the last couple of years, higher oil prices have translated into bigger profits for Big Oil stocks, despite complaints by the companies that it increases their own costs. And integrated oil companies, those that do a variety things in the oil industry, from pumping a portion of their own oil to refining and selling it, will be in a better position than those companies that have to buy more of their oil. With some predicting $4 a gallon gas by spring, it may be that no amount of economic stimulus can stop a recession. Disclosure: I do not own Big Oil stocks. Site disclaimer. 
Photo:k2d2vaca, Creative Commons, Flickr
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