‘Oil at $100 a barrel would tip US into recession’ , panel says

Font Size

Print

Feedback

Email

Discuss

Related Articles

Oil hovers below $79 after 3-day slideOil spikes to USD 81.26 a barrelOil eases to USD 78.65 a barrelOil tops $80, highest since Oct 14, 2008

Aug 28 : Crude oil prices would need to jump by more than a third to tip the U.S. into recession, according to a survey by a National Association for Business Economics.

An increase in crude oil prices to $100 per barrel would sink growth in the world’s largest economy, according to the median estimate of 195 members surveyed from Aug. 1 to Aug. 15. While less dependent today, it would take at least 10 years to find alternative sources of energy to insulate the economy from crude oil at that price.

‘‘Members believe that oil prices above $100 per barrel would probably cause a recession, but we don’t believe they will go that high,’’ Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh and president of the group, said in a statement. ‘‘They see little prospect of significant substitution of other technologies for oil in the next decade.’’

By this time next year, the price of a barrel of crude will probably be $75, according to the median estimate.

Crude for October delivery closed at $72.51 a barrel on the New York Mercantile Exchange on Aug. 25, up 19 percent so far this year.

An increase in violence in the Middle East would probably not disrupt oil supplies, according to most respondents. Still, a plurality of 34 percent of economists, the most in two years, said terrorism was the primary short-term risk to the economy.

U.K. authorities announced on Aug. 10, as the survey was being taken, that they exposed a plot to blow up commercial airplanes over the Atlantic.

Inflation was seen by economists as the third-biggest risk to the economy, up from the March survey which ranked it sixth behind deficits and consumer debt. Accelerating prices were a concern to 12 percent, up from 3 percent in the previous survey.