March 20th, 2012
06:31 AM GMT
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(CNN) – Gas prices in China rose as much as 7% Tuesday, the biggest increase since 2009 to offset rising costs for oil refineries. In the U.S., drivers are seeing pump prices inching up, slowly approaching record highs not seen since July 2008.

As gas prices rise, due largely to fears that tensions with Iran will cut off supply, is oil set to become the new Greece?

The chief economist at HSBC thinks so. Much like worries of the eurozone debt woes could weigh on the global economy, now rising oil prices are attracting similar attention.

“If they continue rising, they really choke off consumer spending,” HSBC’s Stephen King told Quest Means Business. “We’re not talking about recession here, but we’re talking the growth rate which is quite strong could fade during the course of this year.”

The good news: Oil prices fell Tuesday below $108 a barrel in Asia, after reaching nearly 10-month highs. Also Saudi Arabia took steps on Monday to increase oil exports to offset rising worries over Iran.

Still, there’s a sense that higher oil prices are inevitable.

“If you’re at $125, $130 or thereabouts, it’s enough to push headline inflation up, it’s enough to squeeze people’s real income and real wages, it’s enough to cause consumption to slow during the course of this year,” King said. Oil could trigger a global recession if it crests above $150, he added.

“There’s a lot of hope currently about a strong recovery, particularly in the U.S. there’s lot’s of expectations that perhaps the worst is over,” King said. “But with rising oil prices, (it could be) the case that perhaps things won’t be so good later this year.”



soundoff (30 Responses)
  1. TrakerJon

    There may be rising costs at refineries but there is as much speculation in the price of oil as there is cost. Oil industry executive have testified to Congress stating exactly that within the last year or so. Several people have been prosecuted in cases were they have been manipulating the price of oil on the commodities exchanges yet the abuses continue. The only way to stop this is by holding the Securities and Exchange Commission accountable for policing the exchange of oil or simply stop allowing oil to be traded in a speculative ways on the stock exchange.

    March 20, 2012 at 9:16 am |
  2. Menatour

    I bet the dems are peeing on themselves, they will finally get the $5 gallon gas they long for.......
    A patriot must always be ready to defend his country against his government.

    March 20, 2012 at 9:39 am |
  3. QuanXavier

    I don't understand how someone can read this article and be partisan. It clearly states that price is inflated due to market speculation and fear that Iran will cut off oil supply. What would really help would be a concerted effort to replace gasoline in passenger vehicles. This in effect would reduce the demand significantly and we would not be having this discussion.

    March 20, 2012 at 10:15 am |
  4. Mark

    Oil prices are a lie, they speculate a rise in price. CNN and other sites say that higher prices are in the future. We prepare for higher prices and then they jack em up. Worlds biggest scam. Occasionally they bring them down slightly, we are all happy and then back up they go and never return down to the previous low even when oil is cheaper a barrel then previously. Many oit exports have said the price of a gallon of oil could be $2 and the oil industry would still have the largest profits of any industry in the world.

    March 20, 2012 at 11:26 am |
  5. Mark

    Change all our transport trucks in America to natural gas and we would cut our oil consumption in half.

    March 20, 2012 at 11:27 am |
  6. alex

    Well, oil is kinda greasy.

    March 20, 2012 at 11:45 am |
  7. Schizoid

    The world needs to embrace natural gas, at least for public transportation. I know it can be kind of expensive for some people to isntall the system and you could lost half of your car´s trunk because of the size of the Natural gas tank but it is totally worth it, especially if you don´t get out of your city too much.

    March 20, 2012 at 12:45 pm |
  8. Floyd Burgoz

    Consumer spending will slow and people will purchase only what they need. This will bring the Greedy Oil industry in Check. Our economies, especially the American one seems to be based on (I got no have it) Look at the recent I-phone Craze and Nike shoe craze. Are we really this in need of such products that we think drive our economy. I believe the wheel of spending will take a stop and reverse itself to a I only purchase if I can eat it, wear it, or it heals me. It is our mind set in purchasing things we do not need. Summer vacation by automobile, forget it. We will see more along the lines of this change in mind set in the months to come whether the economy is up or down. Most of it is brainwash Hype anyway, especially during an election year anywhere world.

    March 20, 2012 at 1:44 pm |
  9. WilliamPat

    Thanks Israel, for threatening bombing Iran.

    The rest of the world thanks you for the hike in oil prices. So does Iran, incidentally.... they're crying all the way to the bank.

    March 20, 2012 at 2:24 pm |
  10. Gadadhoon

    Ten years ago I looked at trends in supply and demand and thought "maybe when oil gets over $100 a barrel the economy will favor other energy sources and people's view of renewable energy will change." Nope. That time is now, and the general reaction is "IT'S THE DEMOCRAT'S FAULT!"

    March 20, 2012 at 3:58 pm |
  11. castlefire

    @Menatour....Too bad your ignorance has blindsided you.....Democrats introduced a bill requiring American Oil companies to keep a portion of the oit they drilled for here...Your precious Republicans (and some Dems too) at the behest of these oil companies voted it down! Get a clue before posting....Its AMZING how both the liberals AND the conservatives have zero ability to look up the truth and stop relying on CNN FOX and YAHOO for their (ahem propaganda) news!

    March 20, 2012 at 4:49 pm |
  12. Henk

    The US recovering? Haha. All the US has done is increase borrowing to temporarily put off the big shock. 15Trillion Debt and rising quickly. This is no more of a recovery then a drug addicts borrowing money from the MOB to keep up their addiction. An error that will come back to haunt them down the line.

    March 20, 2012 at 4:49 pm |
  13. Michael

    Why Quest sounds and acts in a very aggresive way? Just looking at him, he tries to get into other peoples personal space. He irritates me...

    March 20, 2012 at 8:53 pm |
  14. 66Biker

    There is only one real reason gas prices are going up in the US. Greed. So what if Iran stopped exporting to the US? We only get a small portion of our oil from them. Most of it comes from Canada. All Iran has to do with it was to give the oil companies yet another convenient excuse to rip us off.

    March 21, 2012 at 3:40 am |
  15. AmesIA

    Oil company world view: "The sky is falling!" – pump up prices – profit. "The sky didn't fall!" – keep up prices – profit.
    GOP view: Gas prices are too high – make it easier on the oil companies to make money. Pay for my campaign Mr. Oil.
    Obama view: "Hey, don't look at me. These guys aren't playing nice."

    My view: In order – greedy, self serving, naive. If on a broad front we reduced our personal dependence on gas we would have the last laugh.

    March 21, 2012 at 12:58 pm |
  16. charles schmidt

    you always heard of the nigerian pipeline blast raising the price of oil but did you ever see it on television that was the biggest scam.

    March 21, 2012 at 1:41 pm |
  17. mikrik13

    What global economic recovery...

    March 21, 2012 at 2:35 pm |
  18. Dale

    The world economy is based on oil, and world greed it is the name of the game, world oil market speculators and the biggest oil investors know exactly how to play the game of greed.

    This greed is going to rack the world economy and the recovery.

    March 21, 2012 at 5:49 pm |
  19. Dale

    There are alternative fuels but the world oil markets doing everything they can to squash it, because there is no money in alternatives, world oil markets have everything rigged to their advantage going to alternatives would mess all of that up they wouldn't have no market edge to make huge profits with.

    March 21, 2012 at 5:58 pm |
  20. steve-ski

    if we get through this latest oil price gouging, we will see it again if a couiple of years, and again a few years after that, and again a few years after that. So, woudn't it behoove US to drill baby drill ? Cause so far, wind and solar ain't cutin it.

    March 21, 2012 at 10:02 pm |
  21. THETERP

    Sooner or later the price of oil affects everything we touch in one way or another. Something amazing, produce less and make more money simply by controlling production. That's not just oil either!

    March 21, 2012 at 11:19 pm |
  22. WASP

    wanna stick it to the oil companies? not going to happen. just like they pushed conserve water, take showers instead of baths, don't water your lawn during peak hours. well america listened and we cut our water consumption down so much that the water company was losing money, so they jacked up the price to make up for their loss. oil will do samething. wanna see a real life joke? try and look up how many patents the oil company owns for fuel based tech that americans designed and then were blackballed into selling the idea to the oil companies.......just so the oil company could shelf the idea and keep making gas guzzling automobiles.
    another thing we did it to ourselves. america had the gas scare in the 70's, nothing changed. we had prices jump almost over night in the 90's; people cried about it but nothing changed. when americans are given a choice between a fuel economy car or the big hulking SUV; they take the gas hog because it's a status symbol......."oh look at me i can afford a useless wasteful hunk of junk that will never be used for any kind of recreational activity because i don't want to get it dirty!" lmao congrats america you got want you asked for.

    March 22, 2012 at 11:57 am |
  23. Angela

    we are too busy with the army thats where all the cash goes....obama should step down,,,we see politicians thrown away but we never see that over here. wkae up people do believe that we have the best democracy that is propaganda. the rich are getting richer

    March 23, 2012 at 12:58 am |
  24. Req Uired

    The United States and Europe have together seriously strained the world economy by not being able to keep their finances in order. Yes, there are situations where some debt is a smart idea, but huge debt is always bad. So please, don't blame China, Israel, Iran – or whatever country your current hate favors.

    March 24, 2012 at 1:42 am |
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    March 31, 2012 at 1:12 am |
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    April 27, 2012 at 12:20 pm |
  29. giorgio

    But as a magic wand ... to create new jobs for those young people who have the will and for those parents who have lost!! It seems that these great economists do not have the right numbers to make everything fit.
    Tarry tax evasion and not cure the world of work. If more people to work ... more people to pay.
    Would be formed in a short time, the economic balance.
    No! towards creating new job can not hear anyone. They are taken from the conquest to heal the debts. But no one is up in this vicious circle that has been created. Dishonest with people who do not appreciate that the majority can not make ends meet. But human nature is like this .......... and it will remain just a dream that everyone is well .... hello all giorgio

    April 29, 2012 at 11:22 am |
  30. icons set

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    September 23, 2012 at 4:30 am |

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Quest Means Business airs Monday to Friday, 1600 New York and 2100 London, and is hosted by Richard Quest.

 

 

 
 
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