11:30am

Mon December 27, 2010
The Two-Way

Price Of Oil Eases A Bit, But Still Tops $90 A Barrel

"Oil fell on Monday," Reuters writes, though at just under $91 a barrel it is still quite close to a two-year high.

The wire service goes on to repeat some of the conventional wisdom about the reasons behind oil's rise and one of the reasons to be worried about its surge:

"Oil prices have climbed 35 percent since this year's low in May, driven by the combination of a weakened U.S. dollar and then unusually cold weather in Europe and the United States that has boosted heating fuel demand and eroded inventories.

"The rise in the price of oil and other commodities has raised concerns of inflation in major fuel-importing countries."

On the op-ed page of yesterday's New York Times, Nobel economist (and Times columnist) Paul Krugman challenged some of that conventional wisdom and finished with this:

"What are the implications of the recent rise in commodity prices? It is, as I said, a sign that we’re living in a finite world, one in which resource constraints are becoming increasingly binding. This won’t bring an end to economic growth, let alone a descent into Mad Max-style collapse. It will require that we gradually change the way we live, adapting our economy and our lifestyles to the reality of more expensive resources."

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