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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: stsimon who wrote (74241)9/22/2000 2:38:32 PM
From: The Ox  Read Replies (2) of 95453
 
Money spent on oil, ng and gasoline reduces the amount of discretionary spending people have at their disposal. Higher heating costs and transportation costs do have an effect on wholesale and retail prices but it's not as dramatic as some would have us believe. Actually, higher oil prices are much more recessionary, as I believe they take money away from other segments of the economy, thereby slowing these 'other' segments down.

While I agree higher oil prices will be somewhat inflationary, I don't buy into run away or very high inflation caused by high oil prices. If you have $20/week to spend, most people will spend $20. If gasoline costs make up $10 per week of your spending, the other $10 will be spent on other portions of the economy. If gasoline costs increase to $12/week, obviously only $8/week is left for 'other' purchases.

I believe we are more likely to see a greater slowdown in the economy due to higher energy costs as opposed to high inflation.
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