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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Brian P. who wrote (58899)	1/22/2000 4:52:00 AM
From: Roebear	Read Replies (2) \| Respond to of 95453

BrianP,SD'ers, Looks like my SUV Yuppies said the same as theirs, "you heard it hear first", VBG! ap.tbo.com Jan 22, 2000 - 01:13 AM Oil Price Climb, but Economy Barely Flinched - So Far By Dave Carpenter The Associated Press Oil prices this week climbed to almost $30 a barrel for the first time since the Persian Gulf War, raising worries that consumer prices could follow and in turn drive up interest rates. But aside from the costlier heating oil, gasoline and transportation rates, and the fuel surcharges on airplane tickets, inflation remains tame. And the U.S. economy has barely blinked at oil's impact. The reason: Oil simply doesn't lubricate the new, tech-savvy U.S. economy the way it once did. Still, economists say there will be bigger trouble ahead if oil's rise isn't stopped soon. "If it went to $40 a barrel, it would be disruptive," said Bruce Steinberg, chief economist for Merrill Lynch. "You can't keep going up endlessly without having an effect." Prices for crude have jumped nearly $5 a barrel in the past week. On Friday, the near-term March contract was trading at around $29 a barrel on the New York Mercantile Exchange. Heating oil, spurred not only by oil's surge but a Northeastern cold snap, has risen 50 percent since the beginning of last week. "It doesn't deter me," motorist Chip Tuttle said at a Boston gas station Friday as he paid $43 to fill his sport-utility vehicle. "The economy is good." William Cheney, chief economist for John Hancock Financial Services, said, "Oil's overall impact on the economy is vastly reduced" from years past. "That's due to the increased energy efficiency of companies that use oil heavily and the increased importance of industries that are not heavily dependent on it," Cheney said. The era of cheap oil began to close last March when the Organization of Petroleum Exporting Countries - disturbed by a world glut that drove crude down to $11.37 a barrel in February - cut production by 4.3 million barrels a day to thin supplies and push up the price. OPEC's strategy worked. Prices more than doubled, reaching a nine-year high in November that was set again this week. Two decades ago, a similarly huge spike in oil prices created long lines for gas and sent the U.S. economy into shock. But in 1999, while fuel oil and gasoline prices climbed sharply, the "core" rate of inflation - excluding the volatile energy and food sectors - rose at its smallest rate in 34 years, just 1.9 percent. What happened to inflation? Some economists are still warning of dire consequences, especially if oil's rise continues unabated. Phil Verleger, economist for the Brattle Group, a consulting firm in Cambridge, Mass., sees oil headed to $40 by year's end, prompting several interest rate increases and a recession by year's end. But America has built up a much better resistance to energy shock. The trouble in the 1970s helped spawn a new energy consciousness and the giant steps taken by technology steered the economy away from manufacturing and toward services and the Internet. Oil expenditures, which accounted for 8.5 percent of gross domestic product in 1981, have fallen to about 3 percent, according to the U.S. Energy Information Administration. "Oil is still probably the single most important price that affects the well-being of Americans," said Cheney. "When the price goes up ... America is in a sense a little poorer. But we are much better at adapting to it now." Adjusting or not, consumers are being increasingly squeezed by oil's rise. Among the latest consequences of the increase in prices: -The nation's top airlines said this week they are adding a $20 surcharge to round-trip tickets because of jet fuel costs. -Trucking companies are raising rates by up to 6 percent. -Business owners are beginning to pass on to consumers the new, higher prices charged by shippers. -U.S. gasoline prices are rising again. AP-ES-01-22-00 0107EST © Copyright 2000 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. Brought to you by the Tampa Bay Online Network