Oil Recession of 2008, Revised

Are we in a Recession, with a capital R?

I’ve asked that question and approached it with the conventional economic standards. By those standards the country is not in recession even if some sectors of the economy and millions of average Americans are suffering. One sector not suffering any economic crisis the sale of crude oil. Crude oil sells for $137 per barrel, a world record. At $137 per barrel, and 21 million barrels consumed daily by the US economy, crude oil sales have passed 7.5 percent of the economy. We would call such an oil-based economy very, very strong but we are not an oil-exporting nation. Our nation buys oil. If oil prices were the same as 2002, we would be in a terrible depression.

At 2002 prices , crude oil would be only 1.5 percent of our national production. We can only wish our national production could match the 600% growth rate of unrefined, raw, crude oil in 30 gallon barrels.

As the price per barrel rises, and it has risen 600 percent since the beginning of 2002, our economy hasn’t grown. Our economy is in a contraction when the growth in oil costs are reduced to the normal prices, the prices before the incursion into Iraq.

At the current prices, as a nation we spend over a trillion dollars on crude oil as compared to $166 billion in 2002. Since 2002, six years, our economy has grown about $3 trillion dollars. In unadjusted dollars, 57% of that growth was the sale of crude oil.

Some 400,000 employees work in the petroleum industry . We have 304 million people living in the US. Why are those 304 million giving $1.035 trillion to less than 400 thousand?

I submit if we are not in an oil recession then we have witnessed the largest transfer of wealth in the history of the US and of all mankind.