"OIL" and/or who is responsible for recession?

[NGinpa]

Oil prices spiked in the 1970s, and inflation and hard times followed. Now oils prices are skyrocketing, and inflation and/or recession seem well on their way to making a return. Do run-away prices on a vital commodity cause recessions. If so, who is responsible for this one??

If you do a Google search on "do high Oil prices cause recession", you will get opinions all over the place. Therefore opinions are likely all we can use here, but remember that opinions can actually help lead to a recession because people worried about their future, stop spending.

I find it interesting that so little talk is happening about whether Repub policies have caused this coming recession because if they have, there is no way the Repubs can win the next election (remember It's the economy, stupid?). The repubs tried to sell the story that social security is soon causing a crisis and it must be privatized so nobody can be secure in their older ages, but luckily that did not sell well. However, I want to know why the current economic crisis is not front and center being blamed on every single repub in power over the last 7 years. It is their economic policies that have ruled for 7 years, so if the American electorate is unhappy about their economic future, there is only one party to blame this time around! Also there is that little matter that the top two men in the executive branch happen to be OILMEN at a time when oil prices are going through the roof. HMMMM, coincidence?? I think not. More on that belew!

If oil is a vital commodity for our economy and our social living, which it is, and if the repubs are so stupid that their greed and gouging allowed it to go this high in this country, then they must bear responsibility for the coming recession. What was that Cheney oil meeting all about, and wouldn't you have loved to have been a fly on that wall? Even if the Repubs and Bush/Cheney did not have the power to stop this huge spike in oil, they certainly have not found or implemented any realistic compensatory methods or alternatives to replace this vital commodity. Therefore they deserve to be blamed for all the current and soon to be future suffering. Finally, if the base price of oil goes way up, well I can see how oil prices would reflect this, but I do not see why oil company profits then go to record levels. If the profit margin was the same, then the base oil price increase would be passed along, but something else is at work here when Exxon is setting consistent new profit records every quarter while the US population is scared to death of the future. Why isn't that profit question FRONT AND CENTER IN THIS POLITICAL SEASON??

Who you going to blame??

[sepulveda]

1. i don't "blame " anybody

but fwiw, i trade futures for income and that includes oil futures, so i have some opinions :)

look, the dollar is incredibly weak

in the same period of time that the S&P is up 18%, the dollar is down 38%

by definition if the dollar is weaker, it's inflation, regardless of the cpi games they play. weaker dollar means you need more of them to buy stuff

that includes oil, which is dollar denominated.

personally, i think bernanke should have kept his powder drier.

[Elspeth]

2. In your opinion, has the dollar been deliberately weakened?

?

[sepulveda]

3. yes

arguably it wasn't their intent, but a big part of WHY it is weaker is because of the fed's monetary policy . there are other reasons, but that's among the biggest imo

the fed - in general - gives me willies

[Elspeth]

5. What do you think was their intent?

I'm not so sure that it wasn't intentional, but I don't have enough information.

[sepulveda]

6. the fed

always has conflicting concerns

there concern was loosening capital. which has a # of benefits, but has definitely contributed to weakening dollar

[Elspeth]

7. An unforseen consequence then

OK

[Turbineguy]

4. Bush's thirst for war

created global political uncertainty which drove oil prices up. Bush's taxcuts and method for financing the war drove government deficits and debt up. This lowered the value of the dollar. The oil price reacted to that by going up. Other countries have increased demand that drove oil prices up. That last part cannot be laid entirely at Bush's doorstep.

In other words, if Gore had been inaugurated as President, Oil would be at around $30 per barrel, maybe $45. Repubs would be screaming that that is a 300 to 450 percent rise, but they don't seem to be bothered about the 1000 percent rise they caused.