352. HIGHEST REAL OIL PRICE IN HISTORY
Here's an amazing fact which cries out for comment. According to this chart based on EIA data (click to enlarge)...
We are now at the highest real oil price ever attained in history, going clear back to 1861 and the days of Colonel Drake.
So why is the economy still functioning? Peak oilers, mainstream economists, OPEC... They all believed that high oil prices would crush the economy, and pointed to numerous past cases where that actually happened.
Well, here we are at the highest real oil price ever achieved in history, and the world economy is still vigorously growing.
From Forbes 5/5/08:
"BASEL (Thomson Financial) - Global growth is still strong owing to the resilience of emerging markets but inflation risks are significant, G10 central bankers group chairman Jean-Claude Trichet said, following a meeting of the group.It seems the economy is far more resilient to oil shock than expected. So what happened to the theory? High oil prices killed the economy every time so far. Why hasn't it happened this time?
'At a global level, global growth remains significant despite the slowing down observed in a number of industrialised economies and clearly thanks to the remarkable resilience of a great number of emerging economies,' Trichet told journalists.
'We see ongoing growth at a significant level... even if somewhat lower than in the previous year,' he added." Source
Even more curious: Now mainstream economist types like Yergin, Citibank and OPEC are predicting $150-200. $500 and $1000 predictions are being bandied about. So have we completely abandoned the theory that high oil prices cause economic recession/depression?