Crude oil prices have surged by 30% in the past three months, but according to a new report from Goldman Sachs, this increase is unlikely to have a negative impact on US consumer spending or GDP growth. The report states that the size of the price increase is relatively small compared to previous periods, and any headwind to GDP growth will be offset by lower electricity prices. Additionally, the report suggests that the Federal Reserve is unlikely to tighten its policy in response to higher oil prices. Therefore, Goldman Sachs analysts believe that oil prices will not derail the US economy or consumer spending.
Despite the optimistic view from Goldman Sachs, Continental Resources CEO Doug Lawler warns that crude oil prices could continue to rise and reach the range of $120-$150 per barrel in the absence of new production. Lawler made this statement at the American Energy Security Summit, emphasizing that such high prices would send a shock through the system. Chevron CEO Mike Wirth echoes Lawler’s concerns, stating that more pressure on prices is imminent unless policies are implemented to encourage increased production. Both CEOs argue that despite current production levels reaching record highs, better policies are needed to drive productivity even further.
While Goldman Sachs remains confident in the resilience of the US economy and consumer spending, the warnings from industry leaders highlight the potential risks if oil prices continue to rise without corresponding increases in production. The future trajectory of oil prices and the actions taken by policymakers and industry players will ultimately determine if the US economy can maintain its stability amid these developments.