In a recent report, Goldman Sachs analysts stated that despite a 30% jump in crude oil prices over the past three months, it is unlikely to have a negative impact on U.S. consumer spending or GDP growth. The analysts argue that the price increase is relatively small compared to previous periods, and the potential GDP headwind will be partially offset by lower electricity prices. Additionally, they believe that the Federal Reserve is unlikely to tighten its policy in response to higher oil prices. The report also highlighted that most of the rebound in oil prices has already occurred, based on forecasts of retail gasoline prices using futures and wholesale markets.
However, Continental Resources CEO Doug Lawler cautioned that crude prices are set to remain elevated and could even reach the range of $120 to $150 per barrel without new production. Lawler believes that such a price increase would send a shock through the system. Chevron CEO Mike Wirth echoed Lawler’s concerns, stating that more price pressure is on the horizon unless policies are implemented to encourage increased production. Despite these warnings, oil production in U.S. shale fields has been contracting, and government analysts anticipate a third consecutive monthly decline in October.
Overall, Goldman Sachs remains optimistic that the current increase in oil prices will not significantly impact consumer spending or overall economic growth. However, industry leaders raise concerns about the potential consequences of sustained high prices and the need for policies to support increased production. The future trajectory of oil prices and its implications for the U.S. economy will continue to be closely monitored.