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News Archive
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May 24, 2010
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Global Asset Allocation themes pt2
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Oil becoming a risk to consumer
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September 20, 2007
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In inflation adjusted terms, oil is slightly above 1990 levels and would have to rise to around $100 to meet the 1980 peak.
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Energy productivity has risen and that oil is not as “important” as it once was. Energy consumption relative to GDP has more than halved over that period. So to have the same impact as in the early 1980’s, oil would have to rise above $150. However, it is not only the level of prices but the change in the price that is crucial. A sudden jump to $100 would take us to levels last seen in the 1970’s and cause problems for the consumer.
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