Items in this week’s report:
Largest oil discovery ever reported. (page 1 )
Stick to the “Prime Directive” on oil prices. (page 1 )
Mexico’s net oil export status. (page 2 )
U.S. gasoline and distillate demand. (page 3 )
A 550 hp Cadillac station wagon and the Nissan Leaf. (page 4 )
How long until it hurts?
The graph below is one that I have included in my report several times giving a graphical look at where the U.S. economy might become susceptible to damage from rising oil prices. Now that Oil has hit $85 per barrel on Thursday I thought it would be a good time to take another look at the data. The price of oil has now reached the level it was at in 2007 when it helped push the economy into recession.
The critical question now is what happens when a much weaker economy is exposed to these prices again? One thing is for sure, the rosy scenario that many forecasters see for the economy maybe should be turning a much brighter shade of red instead.
If the oil price doesn’t present a problem consider the news on iron ore. “With old benchmark levels lagging spot prices by as much as 100 per cent in a tight market for the resource, iron ore costs will double in the short term.” It is a good thing in the new virtual internet and smart phone based world there is no need for steel.