Can the Economy Handle $100 Oil?

January 2, 2008
Can the Economy Handle $100 Oil?

"Add it up and you have a wildly bullish day," says Stephen Schork, an energy consultant in Villanova, Pa., and editor of The Schork Report, a daily energy newsletter. "Fresh capital is charging back into the market and looking to buy." The question now: whether the faltering U.S. economy can avoid a recession in an environment of $100 oil. That's because the price of crude oil has knock-on effects throughout the economy (BusinessWeek, 10/29/07), from the price of gasoline to stock market valuation (BusinessWeek.com, 1/2/08). The worry is that consumer spending, which accounts for two-thirds of the U.S. economy, will suffer as prices rise, tipping the economy into a further slowdown or recession.