Gerry Canavan

the smartest kid on earth

Recession Forever

with one comment

As long as there’s spare oil-production capacity, increasing demand caused by economic growth produces only a steady, manageable increase in oil prices. But oil production is now close to its maximum and can’t be easily or quickly expanded. When the global economy grows enough that demand starts to bump up against this ceiling, oil prices don’t rise slowly and steadily; rather, they spike suddenly, causing a recession, which in turn reduces oil demand and drives down prices. When the economy recovers, the cycle starts all over. Because of this dynamic, the production ceiling for oil produces a corresponding ceiling for world economic growth.

Written by gerrycanavan

August 26, 2011 at 11:16 am

One Response

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  1. I believe that when all the leaders of the world decide to use other fuel for cars, and motors, we may have enough in our part of the world to supply oil for other needs, and the price may not be as critical as it is now, with only the greedy doing the thinking. Macro economics is not the easiest subject to comprehend. The OIL game is being played by the criminal minds of the world. We can only decide to rely on other means of energy, making us more independent.

    Mary Dicerni

    August 26, 2011 at 1:34 pm

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