Will high oil hurt the US Economy...if so at what point?

B

Bear Plunger

Anyone study economics around here? At what point does high CL hurt the US economy, or is the economy already in the midst of adjusting to these levels.

Also, how exactly does it hurt the economy, and does it hurt America more than it hurts other countries?
 
Look for marginal costs to explore oil and extrapolate this into the future - by then you will know when oil is hurting.

Time for U.S. to swing rapidly to alternative energy resources !

I think even some smart advisors to the U.S. president identified the need for some action ! =>

"Bush pushes alternative energy proposals
U.S. ‘held hostage’ by dependence on foreign oil, president says"

http://www.msnbc.msn.com/id/11465801/
 
Thanks alot for the reference. What I don't get is how the DOW can still be bullish. If oil kept moving higher, could the stock market keep moving higher too?

I know nobody can tell the future, but the dow seems to be ignoring the high oil. Today we get a pullback in the DOW, but it's not anything alarming.
 
GDP hovering right above zero and eanings are sucking and the Fed has already started cutting rates because of weak economy.

So maybe the answer to your question is it already has!
 
Quote from Bear Plunger:

Thanks alot for the reference. What I don't get is how the DOW can still be bullish. If oil kept moving higher, could the stock market keep moving higher too?

I know nobody can tell the future, but the dow seems to be ignoring the high oil. Today we get a pullback in the DOW, but it's not anything alarming.
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When Crude prices go up then so does the Oil Services and Refiners shares. This places upward momentum in the S&P500 since there is a good deal of these companies in that index. Once the selloff starts in the $OSX, then the S&P gets taken to the woodshed. Yesterdays 6.4% price break in the OSX is a likely signal that Crude prices are about to come off imo...
 
Quote from Realist:

Yesterdays 6.4% price break in the OSX is a likely signal that Crude prices are about to come off imo...
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Yeah, my ears perked up when I heard that oil services were weak yesterday as it seemed odd with oil hitting $89. It would have made a lot more sense if they had been <i>up</i> 6.4%.

It must just be some profit taking and, if the valuations are still good, the OSX will head north again. Has anyone looked at the valuation (forward PE, backlog, PEG ratio, etc.) of the sector?
 
Quote from Aaron:

Yeah, my ears perked up when I heard that oil services were weak yesterday as it seemed odd with oil hitting $89. It would have made a lot more sense if they had been <i>up</i> 6.4%.

It must just be some profit taking and, if the valuations are still good, the OSX will head north again. Has anyone looked at the valuation (forward PE, backlog, PEG ratio, etc.) of the sector?
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No, but i have a number of long positions in the services that i'm holding, even through the next pull back.
 
Quote from Realist:

When Crude prices go up then so does the Oil Services and Refiners shares. This places upward momentum in the S&P500 since there is a good deal of these companies in that index. Once the selloff starts in the $OSX, then the S&P gets taken to the woodshed. Yesterdays 6.4% price break in the OSX is a likely signal that Crude prices are about to come off imo...
More...

Interesting take - i too witness your observations on the S&P. So is it possible that a good portion of the S&P & DOWS bull run in the past year has been due to the bullish energy complex?
 
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