As Hurricane Katrina blows through the Gulf of Mexico Monday, disrupting critical U. S. oil exploration and refining operations and prompting evacuations along the Gulf Coast, oil futures have jumped to new highs, trading over $70. for the first time, according to The Associated Press. This tops off weeks of oil prices edging higher, with sticker shock at the pump now an everyday occurrence. But what do oil prices at record levels mean for the economy and your clients?
“I’m mostly worried that higher oil prices will eventually start to crimp economic activity. I’m much less concerned than the Fed about the potential inflationary impact and more concerned about the economic impact at this level, ” says Kathleen M. Camilli, president of New York-based Camilli Economics, LLC. “ Wal-Mart has sounded the siren that at this level of oil prices, their lower income consumers are starting to be affected.”