Historians will look back at this time period in one of two ways...the economy stayed in a continuous recession unable to recover...or a time when the economy recovered with sustained growth. The key to a continuous sustained economic recovery depends on energy prices.
Oil is the lifeblood of the economy. Continued low energy prices in the 1990s was a key ingredient in sustained long term stable economic growth. The current spiraling upward of crude oil and gasoline prices will prevent the economy from recovering from the recession it is now in. Speculation and reduced supply from OPEC are the main reasons why prices will continue to rise unabated. If that happens, prices and the economy could be affected for several years by this up and down effect-- as the economy starts to improve, the oil/gasoline price speculation will increase along with OPEC reducing supply which in turn causes economic downturn. Again the price of oil would go down and the economy would struggle to improve, but the cycle would just cause prices to then go up repeating the cycle over and over.
As you can see on the two links below, there is no reason for prices to continue upward. The law of supply and demand would deter that if it was not for the unabated speculation.
The DOE link that shows current oil supply is here: http://www.eia.doe.gov/...
The DOE link that shows price rise is here:
http://www.eia.doe.gov/...
However, there are ways to bring prices under control:
- Deter oil and gas commodity speculation. Speculators are now able to buy thousands of barrels of crude oil and sell it a few days or a few weeks later without having to take delivery on the product. This MUST be stopped. Laws must be passed that require Energy purchasers to take delivery of the product. Most of these speculators have absolutely no means of storing any substantial amount of oil/gasoline or would have to pay a lot of money in storage costs. Therefore, requiring the buyer to take delivery would have an IMMEDIATE affect on oil speculation.
- Energy consuming countries should negotiate OPEC. Even though OPEC may not want to negotiate, it would be in their best interest for economies around the world to be stable and not have market ups and downs which bring high volatility. Stable energy prices would benefits producers and consumers.
- Price control would cause the ExxonMobiles of the world to deliver less oil, more independent oil companies would be able to benefit in a controlled market place. Price controls would also end any undue speculation in the price. This would probably be a last resort but may be key for economic growth if price speculation continues unabated. Conservation also would have minimal effect as long as OPEC can reduce supply.