Oil has hit an unprecedented $138/barrel on Friday. Everyone is pretty spooked by the prices by now. The high oil prices will definitely cause short term economic hardship relative to the past few years of growth but it's not all doom and gloom in the longer term. The human population always reacts fastest and most efficiently in times of adversity or extreme hope or dread.
When railways were the hottest thing in the US in the 19th century, money pouring in just inflated the railway bubble before it burst. It did, however, leave an extensive rail network for America to develop. More than a century later, the same thing happened with the internet bubble. Telecommunication companies were increasing their bandwidth capacity and laying cables all over the place in anticipation of the huge rise in internet traffic. The boom was delayed as the bubble burst but the infrastructure gave rise to Web 2.0 as we know it now. The world seemed to be running out of food until the Green Revolution came along. Somehow, things always work out.
The rising oil price has also given countries a reason to lift oil subsidies which would lead to a more balanced supply and demand of oil since the demand side is now artificially supported by the subsidies. Green technology will very likely be the next big boom in the midst of the current oil and coal prices. Till then, car owners will just continue to suffer.
When railways were the hottest thing in the US in the 19th century, money pouring in just inflated the railway bubble before it burst. It did, however, leave an extensive rail network for America to develop. More than a century later, the same thing happened with the internet bubble. Telecommunication companies were increasing their bandwidth capacity and laying cables all over the place in anticipation of the huge rise in internet traffic. The boom was delayed as the bubble burst but the infrastructure gave rise to Web 2.0 as we know it now. The world seemed to be running out of food until the Green Revolution came along. Somehow, things always work out.
The rising oil price has also given countries a reason to lift oil subsidies which would lead to a more balanced supply and demand of oil since the demand side is now artificially supported by the subsidies. Green technology will very likely be the next big boom in the midst of the current oil and coal prices. Till then, car owners will just continue to suffer.