High price of oil has benefited some of Texas economy, but will affect cost of almost everything, economist says

Thursday, November 8, 2007

Just in time for the holiday season, the price of a barrel of oil is at all time high levels, with many analysts predicting it could soon surpass $100 a barrel. Bernard Weinstein, the director of University of North Texas' Center for Economic Development and Research and a professor of applied economics, says long-term economic consequences could happen if the high prices stick.

"Oil prices have gone up 40 percent in the past few months, and so far the markets have brushed off those numbers. But when the prices hit the $100-a-barrel level, the economy will feel the effect in the cost of just about everything, because the price of oil is a component in the cost of everything we buy," Weinstein says.

He adds although it's impossible to know how high prices will eventually go, the important thing to note is how long the prices stay at the higher levels. If the oil prices consistently stay above $100 a barrel, he says, "it will clearly be inflationary."

"I would expect the Federal Reserve to stop its series of recent interest rate cuts. It could also mean that a recession would be more likely. It's a brave new world of price increases that has the potential to spook both investors and consumers," he says.

Weinstein says the high oil prices could also impact the value of the U.S. dollar.

"As the dollar loses value against currencies such as the euro, it helps to fuel the increase in oil prices," he says.

In a bit of an odd twist, Weinstein says some parts of the Texas economy have benefited from the recent jump in oil prices.

"There's been a rush of oil drilling activity in the Permian Basin area, and in the Houston metro area, jobs are being created in the energy services industry at levels we haven't seen since the 1970s," he says. "But on the whole, Texas is a net energy importer, so the jump in oil prices has more minuses than pluses for the state."

UNT News Service Phone Number: (940) 565-2108

Category:

Latest News

Steve Wozniak
Thursday, July 24, 2014

Steve Wozniak, inventor, entrepreneur and philanthropist, will speak as part of the University of North Texas Distinguished Lecture Series.

Thursday, July 24, 2014

Gulin "Eva" Gelogullari, native of the Black Sea Region of the Republic of Turkey, was named the Outstanding Foreign Student in North Texas for 2014 and awarded $2,500 scholarship

Monday, July 21, 2014

New UNT class explores dynamics of working with family.

Lynn Seaton
Monday, July 21, 2014

UNT College of Music jazz bass professor Lynn Seaton has been named a 2014-15 Fulbright Scholar and will depart in August for Latvia, where he will teach for the fall 2014 semester.

Monday, July 21, 2014

While the most elite college and university baseball players in the U.S. head to Omaha every summer for the College World Series, some of the most accomplished Hispanic high school seniors in the U.S. play their own series every summer -- the Collegiate World Series offered by the National Hispanic Institute, a nonprofit organization based in Texas.