Thursday, January 03, 2008

Oil at $100 a barrel

It seems some people are predicting economic gloom and doom as oil has hit $100 a barrel.

There are lots of reasons to be economically gloomy, but I don't think the price of oil is one of them. It is true that not so long ago oil was $10 a barrel but that was very very low. $100 is also high, but economic growth has not stalled as prices have risen to that level so there is no reason to assume that it will slow now.

The only problem is that crossing the $100 mark will hurt confidence, which will slow spending creating a slow in growth where none would have happened, which is a bit odd as the price hike seems to have been created by speculators leaving the dollar and moving their money into oil and gold and a little bit of trouble in Nigeria.

The Times has this, whilst the FT has this.

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