Oil crisis: deja vu by any other name?

[EnumaElish]

If this issue is covered under an existing thread please so direct me kindly. Otherwise, I'd like to hear about people's thinking on whether the current upward trend in oil prices will start acting as a brake on the economy, and even throw us back to the oil crisis days of the '70s.

To have a "crisis" we don't need lines at gas stations; lines were there because of the price controls. But, rationing will happen one way or the other -- if it's not government rationing, then the "market" will ration everybody's gas usage, depending on the import of gas relative to other consumption items.

I believe that is already happening to some extent -- a newer cab I've recently come across was an economy model. The cabbie said it was because it saved on gas.

My question is whether people see this this as a short-term bump (because of the war, China filling up its oil reserves, etc.), or they see it as the beginning of a long-term adjustment which can result in an economic slowdown, maybe another recession, even a recession with inflation.

A recent http://www.ftc.gov/opa/2005/07/gaspricefactor.htm by the U.S. Federal Trade Commission (FTC) has this careful wording (with added color):

For most of the past 20 years, real average retail gasoline prices in the United States, including taxes, have been at their lowest levels since 1919, with U.S. refiners adopting more efficient technologies and business strategies that have allowed them to produce more refined product for each barrel of crude they process. And despite a somewhat different trend in the last few years – with the average U.S. retail price for a gallon of gasoline increasing from $1.56 in 2003 to $2.04 in the first five months of 2005 – it is difficult, if not impossible, to predict whether this sharper rate of increase represents the beginning of a longer-term trend.

 

[hypatia]

I have thought about this for the last few days. And I'm convinced I have hunkered down for the long haul. My area still has massive layoffs and higher then average unemployment. We have engineers competing with high school kids for jobs at McDonalds.
I have been in a regional recession for at least 2 years. People here are just not spending for things they don't half to have. And like in the early 80's many small shops are closing.
Gas prices, geesh I know my gas guzzling cars will remain parked. They have cut the bus lines quite a bit, which will be a hardship for those who depend on mass transit.
Echos of the past? You bet ya.

 

[R0man]

The issue of oil prices and its potential impact on the economy is a topic that has been discussed for decades. The current upward trend in oil prices may certainly have some similarities to the oil crisis of the 1970s, but it is important to recognize that the circumstances surrounding the two events are quite different.

First, the 1970s oil crisis was primarily caused by political factors, such as the Arab oil embargo and the Iranian Revolution. In contrast, the current increase in oil prices is driven by a combination of supply and demand factors, including increased global demand, production cuts by major oil-producing countries, and geopolitical tensions.

Second, the global economy has changed significantly since the 1970s. Many countries have become more energy efficient and have diversified their energy sources, reducing their reliance on oil. Additionally, advancements in technology have allowed for more efficient oil production and alternative energy sources.

That being said, it is still possible that the current rise in oil prices could have a negative impact on the economy. Higher oil prices can lead to increased costs for businesses and consumers, which can slow economic growth. It can also lead to inflation, as businesses pass on their increased costs to consumers.

However, it is difficult to predict the long-term impact of oil prices on the economy. As the FTC report mentioned, it is impossible to predict whether the current trend will continue or if it is just a short-term bump. It is also important to consider that the economy is complex and affected by many factors, not just oil prices.

In conclusion, while there may be similarities between the current oil prices and the 1970s oil crisis, it is important to recognize the differences and not jump to conclusions about the potential impact on the economy. It is important for government agencies and businesses to carefully monitor the situation and make necessary adjustments, but it is also important for individuals to not panic and make rash decisions based on speculation.