?? This is a very good piece, however I can't figure out where Mr. Yergin has been for the last 3 months. It also fails to take into account the ripple effect that any major economic change creates. In our present case it is not dominoes, it is more akin to the expression of a snowball rolling downhill. A snowball starts small, but because snow sticks to snow it increases in mass. Speculation does the same and it now moves from one sector to the next. This is simply a chain of unfortunate events where one feeds upon the other. For sure, oil would have increased in price, but not to the extent that it has. A good portion of the price is speculation and the dollar disparity, all brought about by the housing and credit mess. In the coming months just about everything of a consumer nature is going to experience price increases which stress purchasing. We can already see this in the high visibility sectors such as autos. It is also in the gocery stores, but much more than the obvious shelf price increases. Less obvious can be found in the frozen food section. There are many 2 for 1 sales lately and this indicates that the makers are clearing their storage facilities. These warehouses use industrial chillers and can be sectioned. Close half a building and your energy bill does the same. When that happens they also reduce the labor force. As I have stated in many other previous posts - tell me how good it is in mid August.

This oil shock has been different than those of the 1970s and certainly has driven oil up much more than the others did. Partly, people have recognized the rising prices of course but it has taken a long time for people to see this as a serious shock as we have not had supply shortages, long lines at gas stations or political changes such as lowering the speed limit to 55. There have been only very limited calls for conservation- usually in self-help styled articles rather than political editorials. It has also taken a very long time for demand to start dropping in the US-- people are all excited about the recent drops of around 5-6% in demand in the US and it is a lot but not that much in light of the huge move up in oil prices. Most people think the recent demand drops are great but there is some question as to how long lasting they will be since people are still buying and paying up big for new SUVs (see latest item in Speaking of Autos section at http://www.Barrelomoney.com) even as the are having trouble getting rid of used SUVs. When the economy comes back to strong growth, much of the oil demand will pick up again. In the 1970s it seemed the gas guzzlers were all becoming dinosaurs pretty fast and there was more collective will to cut demand as part of a solution.

We can take 80 dollars a barrel in stride; also there is no recession, everything is just peachy! Paint me purple and call me barney!