New York, Nov. 26 ( Bloomberg ) -- Crude oil prices have more than doubled this year to $27 a barrel, and they still haven't weighed on a U.S. economy headed toward record growth.

The price of oil would have to rise to about $65 a barrel before it would equal its inflation-adjusted peak in 1981, when the U.S. was headed toward a recession, according to a study by the Department of Energy.

Oil accounts for a smaller part of the nation's economy -- less than half of what it did in 1981. The U.S. is in its ninth year of economic expansion as businesses use computers and new technology to produce more using less fuel.

To be sure, higher oil prices can boost the cost of other goods and spur inflation. But the government study shows prices would have to rise much further to slow growth the way they did in the early 1980s, when Iran cut off oil supplies to the U.S., sending prices -- and inflation -- soaring.

Oil probably will fall next year, averaging about $21.60, because OPEC and other exporters don't want prices to linger too long at nine-year highs that could slow demand and entice other producers to pump more, according to the Bloomberg survey. `Oh yeah, I'm looking for more oil,'' said George Yates, the former chairman of the Independent Petroleum Association of America and president of the Harvey E. Yates Co. of Roswell, New Mexico.

Prices won't stay high long because $30 oil is a big incentive for producers to increase output, Yates said. ``There are lots of opportunities at $30,'' he said.

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Don't count on it Mr. Yates...

-- Andy (2000EOD@prodigy.net), January 24, 2000

Answers

I bet this Mr. Yates fellow is a troll.

-- Billy Vyper (billy_vyper@postmark.net), January 24, 2000.

Then how come the US uses MORE oil now???Or isn't that true? Taz

-- Taz (Tassi123@aol.com), January 24, 2000.

To be sure, higher oil prices can boost the cost of other goods and spur inflation. But the government study shows prices would have to rise much further to slow growth the way they did in the early 1980s, when Iran cut off oil supplies to the U.S., sending prices -- and inflation -- soaring.

Boy, if that isn't an open invitation to keep production cuts in place! Why should OPEC even think about releasing more oil until prices get at least to the $40 mark?

-- rocky (rknolls@no.spam), January 24, 2000.

MR. SULU: DEPLOY ADDITIONAL SPIN ANCHORS!! SHE'S NOT HOLDING!! AYE Captain Kirk. Spin Anchors deployed.

-- jes an ol Star Trek lovin footballer (nighttr@in.lane), January 24, 2000.

Good post Andy

And where is this new oil production going to come from? We haven't seen a stabilized 2 year, let alone 1 year price for how long? And price stability is a key component of the risk/reward analysis that is used before pulling the trigger on all oil-patch capital projects

-- solarhermit (solarhermit@hotmail.com), January 24, 2000.

And where is this new oil production going to come from? We haven't seen a stabilized 2 year, let alone 1 year price for how long? And price stability is a key component of the risk/reward analysis that is used before pulling the trigger on all oil-patch capital projects

-- solarhermit (solarhermit@hotmail.com), January 24, 2000.

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Sorry for not following up on your theory at Downstreamers - temp. lost my password - I posted a couple of replies to you on one of the other oil posts and also at www.gold-eagle.com forum if you want to take a look.

Lot happening behind the scenes. I still think we will hit $40+ sooner rather than later - of course could be totally wrong... I think y2k is affecting production and eventually the market will realsie this... again, could be off base... should find out within a month I would thinks...

like your posts - keep 'em coming...

-- Andy (2000EOD@prodigy.net), January 24, 2000.

No, I think that if it hits about $45 it will have that affect. I live in an oil town and those are the calculations that I have come up with. Also I don't think that you will see oil much higher than this, unless a ware breaks out somewhere. justthinkin

-- justthinkin com (justthinkin@oilstuff.com), January 24, 2000.

I'm not sure I'm even understanding all of this.

However, one thing I see is people typically are viewing these higher oil prices and how they affect the U.S. economy. What about all other economies? How will those higher prices impact our trading partners worldwide?

Mike

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-- Mike Taylor (mtdesign3@aol.com), January 24, 2000.

It would be interesting to know what Mr. Yates was predicting when Oil was at $11 a little over a year ago. As people who tried to predict the effects of Y2K have learned, it is very difficult to accurately predict the future. People who try to forecast the stock market know how difficult it is to predict the future.

-- Dave (dannco@hotmail.com), January 24, 2000.

president of the Harvey E. Yates Co. of ......Roswell,(Area 51) New Mexico! HE"S AN ALIEN!!

-- TM (mercier7@pdnt.com), January 24, 2000.