It's bittersweet that oil prices are down over $2/barrel this morning, after all, much of the reason for the lower prices this morning is because of the higher than expected jobless rate.
Today's unemployment report shows that the jobless rate sits at 10.2%, meaning near 16 million Americans are out of a job. It's the highest number in at least 20 years, and throws into question if there will be a recovery in jobs.
While the U.S. economy grew at a slow rate of 3.5%, jobs have been slow to return as employers see increased productivity from those on the job.
Photo: Bill Pugliano / Getty
Oil and wholesale gasoline prices are much lower this morning because of the risk that there will be demand destruction (a permanent dent in demand) as a result of high unemployment.
Gasoline prices that are at a 52-week high also do not help the road to recovery. A weak U.S. dollar and low refinery maintenance continue to support prices where they are, leaving the road to recovery very bumpy and miles long.
Today's report also may place a gentle ceiling on how high oil and gasoline prices are to climb. Even with the weak dollar and other factors, if prices continue to climb, they may throw the entire U.S. economy into another recession. One of the most important pieces of an economic recovery in the U.S. is affordable energy, and prices are too high right now with 16 million Americans jobless.
We will see prices fall this weekend as retail prices slowly catch up with falling wholesale costs. The report also throws into question where prices will be this Spring. More on that later.