Boone Picken’s vision of the future is coming to pass. Oil stands at $66 a barrel. A hurricane, trouble in the Middle East, worsening unrest in Nigeria could all take it up. OPEC says it may not invest more in exploration if countries like the US insist on making huge investments in bio-fuel developments.
Rising oil prices and summer driving could send gas prices, already running at nearly $4 in some parts of the country, toward $5.
Almost nothing could be worse for an economy that is already growing slowly. The US auto industry is at the very beginnings of a recovery. Ford (F) and GM (GM) could have their programs set back several quarters, especially if demand for SUVs and pick-ups drops any further. The airline industry could see its mini-recovery hammered. Retailers like Wal-Mart (WMT) could watch trips to their stores drop as their lower income customers work to save money on fuel.
The economy seems to be weathering the housing downturn which has to make home owners feel poorer than they were during the housing boom almost two years gone. Fuel oil and gas prices increases will only racket up that felling of uneasiness.
If the economy is at a tipping point, especially consumer spending, then a summer of spiking fuel prices could tip it in the wrong direction.
Douglas A. McIntyre can be reached at [email protected].
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