Oil heads back up

Will we ever learn? The economic meltdown of last year was largely caused by the rise in commodity prices, especially oil.

At a time of white-hot growth and over-leveraged banks, oil reached $140 a barrel before dropping back to $40.

Now, inevitably,the price is creeping up again – into the high $60s last week.  Motorists will have noticed that gas prices are also on the rise even though the economy has not recovered.  Stagflation is back.

With rising demand in developing economies, rising production costs and restrictions on supply, prices will continue heading up for the forseeable future.

Plan ahead for the next oil shock and the post-oil world.  Mind you, if we know its coming, then its hardly a “shock.  Opec members aere aiming to stablise the price at around $70 but The Economist does not expect oil to top $65 until late next year.  It says the lack of discipline within OPEC will lead to greater production as other revenues drop.