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Quote du Jour: Rising oil = Head Wind

The crude oil price has been scaling new recovery highs over the past few days and indications are that the trend is solidly up. Although oil is marching higher as a result of increased demand, an increasing price also represents a head wind for the economy -- almost like an additional tax. Here is why:

"Every $1 per barrel rise in oil decreases U.S. GDP by about $100 billion per year, and every one cent increase in the gasoline price decreases U.S. consumer disposable income by about $600 million per year," said Joseph Lazzaro of Daily Finance.

The price chart of gasoline is below and the oil chart is here.

US Gas Price
Source: BusinessInsider -- Clusterstock, December 23, 2010.

Gas Price Cartoon
Source: Bob Englehart, Comics.com, December22, 2010.

 


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