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Bearish Oil Outlook

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The Economist‘s blog Free Exchange sums up the painful short-term oil outlook:

Demand for petrol is highly inelastic. Petrol consumption in America has only fallen by about 0.2 percent in the past year, despite a doubling of oil prices. One suspects that over the long-term, the country will get better at substituting away from expensive fuel, but given recent trends–and a Goldman Sachs prediction that oil may hit $200 per barrel within a year–the short-term is likely to be painful indeed.

Ouch. Despite the day’s strengthening of the dollar, oil is up $1.71, at $123.55.

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Written by walonline

May 7, 2008 at 2:14 pm

Posted in Economics, Energy, Markets

Tagged with , ,

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