April 21, 2006 | posted by Michael Baxter in Uncategorized |

How has the global economy managed to perform so well while oil hits an all time high?

At any other time this would have caused a recession.

A part of the reason is simply that the high price of oil is counteracted by the low cost of other products - clothing for example

But another reason is simply this. After allowing for inflation, oil is not that expensive, at least it was much more expensive in the late ‘70s and for the first half of the ‘80s.

Look at the graph and you will see what we mean. Taking 2005 as the base price, after allowing for inflation, oil has been much higher before

The IMF warns that the price is likely to stay at its current highish levels. .

But some fear, things could get a lot worse. If the Iran nuclear research programme crisis gets deeper, some are warning of oil doubling in price- and that really would be bad news.