Cost of oil: $100 a barrel, $200 a barrel etc..

[Nagel]

If the likes of China, India and Brazil keep growing the world demand for oil will only rise. Imagine 1bn Chinese wanting petrol for their cars. If demand goes up and supply stays the same the price will only go up. If supply drops due to instability in the supplying countries the price will go up sharply. It's hard to see the price ever going down again.

 

This is what makes this recession different from the rest. In previous recessions the price of oil has dropped sharply due to decreased demand, but that hasn't happened this time as the recession hasn't hit the new economies in China, India and the rest and demand is still high in those countries.

 

The drop in the price of oil due to decreased demand during a recession was a major factor in the recovery after recession, but that's missing this time. It's hard to see how we in the west will ever recover.