A person I follow tweeted:
Perhaps this middle east tension will continue to escalate pushing oil prices higher and helping Alberta's deficit situation.The middle-east situation and our relationships with it are very complex. I can't stress how complex, and how dependent the whole inter-connected global economic situation is of them. I also cannot stress how dependent consumer economies are on low oil prices nor on how low their tolerance is for high prices.
In the last few years, environmentalists I follow have often pointed to the U.S.'s oil consumption levels as evidence of some sort of energy efficiency or green success. Business Insider today however has published a great piece and an alternative explanation for this phenomenon.
These numbers do not tell me that we are in a recovery. Despite increases in distillate and KJet demand in 2010 and 2011, and in gasoline in 2009 and 2010, these were well short of recovering from the decline in 2008/09. The decline year-over-year in these three core transportation indicators suggest a slowing in the economy if not a recession.It also fits what I expand on in this blog about where the price of oil is going, and why. There is plenty of consumption room in terms of pre-2008 levels, but when it comes to price - since 2008 it hasn't taken much growth to run the price up to unaffordable levels causing recovery to stall - and the price to drop.
US Crude Settles Higher at $99 After Fed Stimulus
$99 is a weak response to QE3, especially considering middle-eastern tensions are at an all-time high. There is a barrier, and that barrier is demand which is managed by price. People are barely holding on now as it is in the major western consumption oriented nations, they simply can not afford a higher price.
This is not to say a higher price won't come, but it shouldn't be cheered for as Alberta's savior for it won't last long enough to do anything other than put world-wide economic growth into a tailspin of epic proportions.
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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading. He currently works for eQube gaming systems.
Nazayh Zanidean is a Project Coordinator for a mid-sized construction contractor in Calgary, Alberta. He enjoys writing as a hobby on topics that include foreign policy, international human rights, security and systemic media bias.