Why is it that whenever oil prices have risen by 60% or more?

..recession has almost always followed.Why is it that whenever oil prices have risen by 60% or more?
Hi,





The two are related parts of the business cycle. Good times are followed by bad times. With oil, commodity prices rarely outpace inflation except in times of exceptional increases in demand.





These are typically temporary, and often are temporary commodity-price bubbles.





Example:


During 2006 and 2007, we saw a rise in oil prices because the world economy was growing and its appetite and demand for oil was growing. As the demand for oil caused lower invetories and expectations for higher future prices, investors bought into oil contracts and oil futures both to guarantee themselves a certain price of oil and to speculate on future prices increases, betting they could make money by making the right bet. As the world economy was dragged down by the US economy, the price of oil was similarly affected as its price could only be justified during good times when prices were expected to continue rising. As the first hints of recession started, investors new the oil price party was over.





Good times are often associated with rising price pressures (inflationary pressures), rising incomes, low interest rates, growing economy, rising GDP.





Bad times are often associated with easing price pressures (deflationary pressures), dropping incomes, high interest rates, slowing economy, dropping GDP.Why is it that whenever oil prices have risen by 60% or more?
increased in oil prices doesn't cause recession, it does caused inflation, where the value of dollar depreciated and that's why prices went up.





recession occurred when the price of everything dropped, and businesses laid of workers to keep their profit, that increased the unemployment rate.





we are in the recession not because the oil is decreasing dramatically, but the prices for everything is decreasing, or it's about to decrease (well..lowered the oil price did contribute to that.) that mean the company aren't going to make as much as it use to, therefore, they have to laid off workers.





They are solutions to resolve this recession we are about to have. we can lower the min wages (like that's going to happen! ) or we can increase our expenditure to bring the price up again.
Because everything is related to the price of fuels from heating your home to going out to eat. The cost of transporting goods goes up and every industry feels the crunch and they pass those costs on to the consumers who are already burdened by the high cost at the pumps.
Because it's a reflection of the failure of the capitalist system, oil and capitalism are intertwined.

scars