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Video Interview: High Oil Prices Will Hurt Consumers

  • Written by Syndicated Publisher No Comments Comments
    March 12, 2012

    oil-prices

    As oil prices continue to surge, economists are locked in a full-on debate about how much they will affect the economy.

    Bulls argue that “this time is different,” saying that today’s consumers have handled oil above $100 a barrel so far, so they’ll be able continue to handle it and the economy will roll merrily along.

    Bears, meanwhile, argue that oil prices will eventually clobber the economy–by forcing consumers to spend more of their incomes on gas, heating oil, and other petroleum-based necessities, thus leaving them less to spend on other things.

    Lance Roberts, the head of StreetTalkAdvisors, is in the latter camp.

    Roberts believes that most economists are underestimating the impact of today’s oil prices. Specifically, he says that the damage inflicted by high oil prices is not just a function of price–it’s also a function of time. In other words, consumers can adapt to temporary spikes in oil prices, but the longer oil prices remain elevated, the more they’ll crimp overall consumer spending.

    Roberts also believes that the recent apparent “recovery” in consumer spending, which many observers interpreted as a bullish sign for the economy, has actually been the result of higher energy prices. Consumers are being forced to spend more on oil and gas, Roberts says, and this is boosting overall consumer spending. But this increase in spending is not, Roberts argues, the result of consumers feeling better about the economy and thus loosening their purse strings.

    If oil prices remain at today’s level (or higher) for a long time, Roberts argues, they’ll ultimately wallop the economy.

    Images: Flickr (licence attribution)

    About The Author

    Lance Roberts – Host of Streettalk Live

    lance robertsAfter having been in the investing world for more than 25 years from private banking and investment management to private and venture capital; Lance has pretty much “been there and done that” at one point or another. His common sense approach has appealed to audiences for over a decade and continues to grow each and every week.

    Lance is also the Chief Editor of the X-Report, a weekly subscriber based-newsletter that is distributed nationwide. The newsletter covers economic, political and market topics as they relate to the management portfolios. A daily financial blog, audio and video’s also keep members informed of the day’s events and how it impacts your money.

    Lance’s investment strategies and knowledge have been featured on Fox 26, CNBC, Fox Business News and Fox News. He has been quoted by a litany of publications from the Wall Street Journal, Reuters, The Washington Post all the way to TheStreet.com as well as on several of the nation’s biggest financial blogs such as the Pragmatic Capitalist, Zero Hedge and Seeking Alpha.
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