It will probably be a cold winter in the Northern Hemisphere. It has certainly started that way.
Recent indications are that consumer spending moved up sharply in November, and retail sales are somewhat better than expected.
But, on the other side of the economic coin, there is evidence of inflation in the US economy which is probably mirrored in Europe. Certainly China, where inflation is running in the double digits is facing uncontrollable price increases for food and commodities, including oil. A big piece of the increase in US consumer prices was also driven by energy.
Oil producing nations are now facing a change, and a fairly new one. Inflation and the potential that the West will dodge a recession were not the big headlines two weeks ago. An economic slowdown took most of the front page ink.
But OPEC & friends have looked at the recent energy price spikes in the US and China and they now have to worry about whether global inflation may take a hand in hurting the worldwide economy. Perhaps because of that the cartel is beginning to put out word that it will look hard at increasing production in February.
Algeria’s oil minister told Bloomberg that a long winter and good economies could be cause for a production increase. Demand is rising, he says. But, it was all along Algeria’s Chakib Khelil does not hold all of the votes, but it is likely that his comments to a major news agency are a testing of the waters. OPEC wants to make as much as it can on every barrel, but inflated oil prices may be getting to the point where the barrels comes too dearly.
Douglas A. McIntyre
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