Oil Prices

An article in the Financial Times indicates that oil prices started the 2008 recession.

Professor James Hamilton of the University of California, San Diego claims that although there were many issues with the US economy, "The evidence to me is persuasive that, had there been no oil shock, we would have described the US economy in fourth-quarter 2007 to third-quarter 2008 as growing slowly, but not in a recession."

Oil prices are not yesterday's problem, and he warns, "Some degree of significant oil price appreciation during 2007-08 was an inevitable consequence of booming demand and stagnant production . . . If growth in the newly industrialised countries resumes at its former pace, it would not be too many more years before we find ourselves back in the kind of calculus that was the driving factor behind the problem in the first place."

http://www.ft.com/cms/s/0/14ad3e38-2243-11de-8380-00144feabdc0.html