Recently, due to the turbulent political situation in the Middle East, international oil prices continued to rise and exceeded the 100-dollar mark per barrel. This made many people worry that high oil prices will pose risks to global economic growth. In recent days, due to Japan's 9th-level strong earthquake, international oil prices have been affected by concerns that Japan's demand may be reduced, and then it is set back below 100 US dollars.
The question is: Who is the price of oil? Is it expected to push up oil prices or is real demand at work?
Soaring oil prices will indeed greatly increase the cost of recovery and damage the real economy. This is also a big negative for employment. But everything cannot be too absolute. Columnist Carolyn Baum invented the term “high oil price syndrome†to describe people who have a “deafening†attitude toward high oil prices. Baum said that patients with “high oil price syndrome†blamed the lack of economic recovery on high oil prices. They often make very different judgments based on the fact that high oil prices: either assert that high oil prices will cause inflation, relative price changes can evolve into an overall rise in the overall price, or directly declare that rising oil prices may cause deflation, because this Will impact consumer demand.
This practice of drawing prices and oil prices on the equal footing is inevitably a bit partial. Most people are used to alternating inflation with rising prices, such as wage inflation or commodity inflation, but the two cannot be confused. The rise in the price of oil or other commodities is only a relatively high price relative to other assets. In the final analysis, inflation is a currency phenomenon: excessive amounts of money are pursuing insufficient commodities, and rising oil prices are not synonymous with inflation.
People who worry about the economic prospects whenever they encounter oil prices soaring, may wish to think from another perspective: Although oil prices are high, wealth will be transferred from consumers to producers, and the cycle will continue. High oil prices allow some people to gain the incentive to conduct oil exploration. The oil producers will then buy new oil drilling equipment and hire more people. This money will therefore return to the economic system, and it is unlikely that the economy will have a "great loss."
From the perspective of consumers, rising oil prices have forced them to pay higher costs for refueling and heating, leading to a reduction in other discretionary consumption. However, in turn, they think that the most they change is consumer content, and the total amount may not be affected.
From this point of view, the current level of crude oil prices may not have much negative impact on the economic recovery. However, these “high oil syndrome†patients’ concerns about high oil prices that hinder the economic recovery should indeed draw attention. Perhaps investors can consider such a question as why the price of oil has soared, and what is behind the push is expected to supply the relationship.
According to overseas media data, the current trend of volatility shows that the demand of hedge funds and speculators for call options is far greater than the number of counterparties can provide. However, if investors profit from rumors of supply disruptions in the Middle East, and thus continue to buy call options whose execution prices are far from the current price, they are expected to stay away from reasonable ranges and greatly exceed real demand. High oil prices are not terrible. The most terrible is the excessive overdraft expectations and the lack of real demand to support the price. This kind of anticipatory support oil price is the most dangerous to the economic recovery.
The question is: Who is the price of oil? Is it expected to push up oil prices or is real demand at work?
Soaring oil prices will indeed greatly increase the cost of recovery and damage the real economy. This is also a big negative for employment. But everything cannot be too absolute. Columnist Carolyn Baum invented the term “high oil price syndrome†to describe people who have a “deafening†attitude toward high oil prices. Baum said that patients with “high oil price syndrome†blamed the lack of economic recovery on high oil prices. They often make very different judgments based on the fact that high oil prices: either assert that high oil prices will cause inflation, relative price changes can evolve into an overall rise in the overall price, or directly declare that rising oil prices may cause deflation, because this Will impact consumer demand.
This practice of drawing prices and oil prices on the equal footing is inevitably a bit partial. Most people are used to alternating inflation with rising prices, such as wage inflation or commodity inflation, but the two cannot be confused. The rise in the price of oil or other commodities is only a relatively high price relative to other assets. In the final analysis, inflation is a currency phenomenon: excessive amounts of money are pursuing insufficient commodities, and rising oil prices are not synonymous with inflation.
People who worry about the economic prospects whenever they encounter oil prices soaring, may wish to think from another perspective: Although oil prices are high, wealth will be transferred from consumers to producers, and the cycle will continue. High oil prices allow some people to gain the incentive to conduct oil exploration. The oil producers will then buy new oil drilling equipment and hire more people. This money will therefore return to the economic system, and it is unlikely that the economy will have a "great loss."
From the perspective of consumers, rising oil prices have forced them to pay higher costs for refueling and heating, leading to a reduction in other discretionary consumption. However, in turn, they think that the most they change is consumer content, and the total amount may not be affected.
From this point of view, the current level of crude oil prices may not have much negative impact on the economic recovery. However, these “high oil syndrome†patients’ concerns about high oil prices that hinder the economic recovery should indeed draw attention. Perhaps investors can consider such a question as why the price of oil has soared, and what is behind the push is expected to supply the relationship.
According to overseas media data, the current trend of volatility shows that the demand of hedge funds and speculators for call options is far greater than the number of counterparties can provide. However, if investors profit from rumors of supply disruptions in the Middle East, and thus continue to buy call options whose execution prices are far from the current price, they are expected to stay away from reasonable ranges and greatly exceed real demand. High oil prices are not terrible. The most terrible is the excessive overdraft expectations and the lack of real demand to support the price. This kind of anticipatory support oil price is the most dangerous to the economic recovery.
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