The Impact Of Higher Oil Prices On The US Economy; + NATO’s Non-Intervention Remarks Could Worsen Syria’s Conflict
We don’t wish to speak too soon, but the technicals suggest that oil prices could be headed back to their 2008 record highs. It was at that time, in June-July 2008, that we said that the risk to the global economy was flipping quickly from inflation to deflation, which of course played out spectacularly. The US recession officially began in December 2007, exacerbated by high oil prices, with Brent crude oil hitting US$147/bbl by mid-2008, and high fuel prices hurting consumers.
We are in the process of revising our oil forecasts upward, and are even considering the possibility of oil prices breaching their all-time high in the event of a supply shock. As such, we have just published a new article on Business Monitor Online examining the impact of a big increase in oil prices. Higher oil prices run the risk of derailing or at least holding back the US domestic consumption recovery, but there would also be some winners, from oil services companies to oil sector employment. The latter has increased by 51% since 2001, in contrast with non-farm payrolls, which have declined by 0.1% over the same period.
NATO Chief’s ‘No Intervention In Syria’ Comments Could Worsen Conflict
Late last week, NATO Secretary-General Anders Fogh Rasmussen stated that the alliance has no intention of intervening in Syria, even if there was a UN mandate for this. He also rejected the idea of providing logistical support for possible ‘humanitarian corridors’ to Syria’s worst-hit cities. Rasmussen said that Syria is too complicated, ethnically, politically, and religiously, adding that Middle Eastern countries should find a solution to the conflict.
Rasmussen’s comments are risky, because they could actually give Syrian President Bashar al-Assad even greater confidence to crack down on the opposition, which has been in open rebellion for 11 months now. Prior to Rasmussen’s statement, there had been speculation that the Western alliance might launch air attacks in support of the Syrian opposition, as it did in Libya. It could be argued that this ambiguity served as a check on Assad. Paradoxically, Rasmussen’s remarks could make NATO intervention more likely, if Assad now uses even deadlier force, at which point the West would come under rising pressure to intervene.