Wednesday, December 7, 2011

Should we be concerned with the oil prices!!!

Oil prices are hovering more than $100 per barrel for some time now. This is not the first time it happened. A few years ago oil prices first hit this level and there was an absolute chaos all around. Everyone was talking about oil prices being close to $4 per barrel. People started driving less, buying fuel efficient vehicles or exploring alternate energy options. Economy soon collapses and we went in a recession pushing oil prices much lower.

This time again it is over $100 per barrel for few days and much of the economy is weak. This time there is no blame on the commodities market or high oil consuming nations and people hardly even talk about it. Looks like high oil prices have now become part of life. Oil prices started soaring again with some positive results out of the economy. Yes if the economy goes back into recession, oil prices will drop again. But the drop will be temporary. If the economy starts performing at full throttle than the prices would once again soar high. It is difficult to imagine as to what prices we would see on oil if the economy performs at full potential.
It is acceptable for the oil prices to move with the economic boom and bust… but do the current economic condition justify $100 per barrel?

The views expressed in this article are sole opinion of the writer. It does not intend to provide any investment or financial advice and should not be relied upon to make any kind of investment decision.

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