A handful of Wall Street analysts believe oil will top $100 a barrel by the end of the year. If so, the economy could rush toward recession. Oil trades for $90, and OPEC may not be satisfied that its members make enough money at this level. And Russia is a wildcard because of its invasion of Ukraine.
According to The Wall Street Journal, “Economists fear rising costs will push Americans to slash spending on restaurants, travel and other areas, stalling growth in a condition often known as stagflation.” Oil prices are at the heart of that calculation. (Inflation is stressing people out the most in these states.)
Oil prices have risen faster than almost any other component of the consumer price index in the past several months. The opposite was true late last year and early in this one.
The International Energy Agency recently said oil demand globally remains high, and alternatives are not coming online fast enough. (Another factor that is just as important is that if crude demand does not drop, climate change will worsen.)
The effect of crude oil on the economy goes much beyond gasoline prices. Home heating oil, particularly in the winter in the northern tier of states, takes a bite out of many people’s budgets. Travel costs are bumped up by jet fuel. Petrochemical products are used across the economy.
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