Economic costs of high oil prices, and benefits

This Christian Science Monitor article and this Economist article provide some insightful analysis on the economic costs of high oil prices. Regular readers of this page will already know much of what’s contained in these articles — the unfortunate concatenation of Venezuelan unrest, possible war in Iraq, and an unusually cold winter in the US Northeast has led to higher and more volatile oil prices. And if these high and volatile prices are sustained for more than a couple of months, then economic recession is a likely consequence.

Although the short run may look fairly bleak, though, always remember and never forget that it’s situations like these that lead both producers and consumers to shift away from oil-intensive technologies, engage in research to produce technological change, and make other energy sources more competitive and commercially viable.