Is oil strike three for the U.S. economy?

[Jon8503]

With the tax cuts losing their punch and home equity tapped out, oil at $50 may be a blow the economy just can't shake off.

By Dan Ackman, Forbes

Leave it to America's allies in Saudi Arabia. With oil prices nearly twice as high as they were a year ago, the kingdom has announced it will sell more of its inventory and pretends it is doing its customers a favor.

"The kingdom is also ready and capable of making up for production shortfall occurring anywhere in the world," Saudi oil minister Ali al-Nuaimi said. And at $50 per barrel, why not?

As oil prices continue to rise, U.S. gasoline prices are increasing in response, and economists are starting to take notice. For now, few are predicting a return to recession, despite the fact that oil price spikes in 1981, 1990 and 2000 all tugged recessions in their wake. After years of ignoring inflation in reporting "record" oil prices, now most reports can't talk about it enough, pointing out that oil prices are still not at the inflation-adjusted levels of 1981.

http://moneycentral.msn.com/content/invest/forbes/P96412.asp

[gottaB]

1. Goldman Sachs is dreaming. There's no reason for oil prices to fall

at least not down to $36

Demand is increasing. Supply is limited. There is nothing about the "geopolitics of oil" that suggests greater stability on the immediate horizon.