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Page added on May 28, 2009

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Energy supply crunch brewing

Forget low oil prices. The worry of the moment is a spike in oil prices and how long it will take before a supply crunch sends prices soaring.

And if one subscribes to the views of former CIBC World Markets economist Jeff Rubin and University of California, San Diego economics professor James Hamilton, a spike in prices could send the world tumbling back into recessionary territory, just as it is about to climb out of it.

Both Rubin and Hamilton hold the view that the current recession is the result of a spike in oil prices and not the collapse in the U. S. housing market.

So what’s the deal with the about-face in sentiment on oil prices?

It doesn’t get much simpler than the basic economic principles of supply and demand.

Calgary Herald

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