To continue my theme of natural resources, a timely article from Don Luskin was in The Wall Street Journal yesterday. He outlined how our economy may be able to better defend against high oil prices than previous moments in time. I have appended below a few highlights from the article. Stay tuned! {TJM}

Oil Prices Won’t Kill The Economy | Donald Luskin in The Wall Street Journal

• Research by economist James Hamilton of the University of California, San Diego suggests that oil prices imperil the economy when they reach a new three-year high. Steven Kopits, managing director of the energy consulting firm Douglas-Westwood, says the overall economy is threatened when the 12-month average oil price exceeds the year-ago 12-month average price by more than half. Below those levels consumer and investor expectations aren’t sufficiently disrupted to make a difference. Both conditions are very far from being triggered at today’s prices.
• More importantly, the U.S. economy is today well-positioned to absorb an oil spike without experiencing it as an oil shock. First, we’re nowhere near peak oil consumption, which we hit in August 2005 at 21.7 million barrels per day. We’re now 9% below that, even though consumption has recovered substantially since its worst levels of the Great Recession in September 2008. The last three recessions—those that started in 1990, 2001 and 2008—began only after oil consumption reached new peak levels.
• We’ve also grown much more efficient when it comes to energy consumption. It may come as a surprise to many, but today in the U.S. we’re consuming the same amount of crude oil that we did 12 years ago and real output is more than 25% higher. For all the talk of our being the planet’s most villainous energy hog, we’ve become remarkably oil efficient.