Predictions for $5.00 gasoline are more frequent even if rationale is contradictory and frankly avoids the core of the problem. Neither demand/supply considerations nor political risk justify the spike on their own and are contradictory in concert. Mutually Exclusive Risks/Possibilities: It’s argued that the ongoing tensions with Iran are inflating risk of cut-off. Perhaps. It’s also argued that brighter global economic perspectives also raise prospects for greater demand. Perhaps. However, the two are mutually exclusive. A war with Iran and any conflict around Strait of Hormuz would immediately reverse global economic prospects and plunge us into recessionary spiral. (I also believe that much of Europe is in for prolonged period of at best uninspiring growth and jobs/economic stagnation regardless). The Oil Bubble as Triggering Past/Future Recession: With or without conflict, $5.00 gasoline in US ($120 to $150 per barrel petroleum prices) turn economic prospects downward. In fact, we may already be facing that critical tipping point now as gasoline in US nears $4.00. Consumer confidence is already evidencing signs of drooping most recently. I’m impressed that the oil/gasoline bubble was as responsible as any for 2008 recession. It has been in part diversion to focus on housing bubble and effectively blame homeowners while ignoring even more inflated real-asset prices/bubbles. Some argue that speculation is ultimately self-corrected by the markets themselves. Perhaps ultimately, but the correction mechanism is an economic downturn, recession that most of rest of society pays for (along with the higher prices during the run-up) while most of speculators have pocketed their profits and take extended vacation until next predatory opportunity. Uphill Political Landscape for Obama Re-election: Of course, $4.00 or $5.00 gasoline may already be altering the terrain of coming elections. Recession would undoubtedly tip the landscape into an almost impossible battle for Obama’s reelection. Also Read –“Petroleum Sprices Spike, But Why?” - diplomaticallyincorrect.org/films/blog_post/petroleum-prices-spike-but-why/45705 By Ambassador Muhamed Sacirbey – Follow @MuhamedSacirbey Facebook = Become a Fan at “Diplomatically Incorrect” Twitter – Follow us at DiplomaticallyX International Financial Crisis Channel - diplomaticallyincorrect.org/c/international-financial-crisis
$5.00 Gas, Then Recession, Then Obama Loses!
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