Oil prices and recessions

Are high oil prices a sign of recession?

High oil prices could indicate recession

Or are low oil prices a sign of recession?


Dropping oil prices could be a sign of recession. When a large economy slows, demand for oil slows, and this usually results in lower oil prices (lower demand = lower prices).

As long as you control for all the variables that affect supply and demand (from all demand sides and all supply sides), you can take falling oil prices into consideration. However, falling price is one of many indicators that must be evaluated before declaring a recession.

Just be careful you control for all the variables. Oil is a volatile market, and overproduction and lack of OPEC control on prices can cause prices to tumble sans a recession. Also, stagnant oil prices could actually be viewed as falling prices, since they are not keeping up with inflation.

High oil prices could cause a recession and low oil prices could be a sign of recession. Generally oil prices and economic growth are more independent of each other than they used to be. When evaluating articles such as you posted remember all economic news is bad news.

I’ve noticed that. When oil prices are high the news is how that’s bad for consumers. When they’re low it’s about how it’s bad for the oil companies.

They also tell us that low oil prices are bad, because it’s a sign of recession, and that it will cause people to drive more, driving up demand and forcing prices to go up. Then we’ll hear about ‘gouging’ every night.