Two days ago, the Financial Times ran a story: "Rising oil prices threaten to derail the global recovery." That was in the section on Markets and investing. Today there was a more authoritative op-ed on 'W-shaped recovery" which said essentially the same thing.
Unfortunately, a whole lot people have learned this year that "recession" can really mean THEM.. immediately.
**IF** we took really strong action this year to break our addiction to oil -- something which has YET to happen, and is not part of the Waxman Act -- would it be relevant to
this immediate threat? After all, if takes 10 to 20 years for some of these measures to take effect, what could it do about the possibility of a re-crash as soon as next year?
Answer: a lot. In the first place, one part of the required actions would immediately
stimulate PRIVATE SECTOR investment, a very healthy way to stimulate the economy without adding to the deficit. (Neither ordinary tax cuts nor government spending have that important advantage.) In the second place, as the Financial Times makes very clear,
a large part of the world oil price is a very healthy and proper adjustment based on
FUTURE EXPECTATIONS of shortages and high prices; action which changes those expectations, through real action and not just rhetoric which financial folks know to ignore,
would change oil prices NEXT YEAR.
I just hope it happens. Climate change politics may just gum up everything this year,
unfortunately... without benefiting the climate either, or getting anything passed.
There is hope for now, but on the surface, it looks like a very tough situation.