Events looming on the horizon

Gordon is at the palace as I write this but there are a couple of stories doing the rounds this morning that may overshadow this campaign.

Teachers are threatening to take co-ordinated strike action with other public sector unions in protest at proposed cuts after the general election.

As the FT says in its leader this morning Is this the springtime of our discontent?

A warning though from the voice of business

The unions could, of course, strike in defence of their pay and their jobs. They could cause mayhem. But they should be wary: they would not attract sympathy from a de-unionised public. The generous pay increases of the past decade have left nurses, doctors and teachers well off. The state, moreover, is visibly out of cash.

The other being the rise in petrol prices.The only time that Tony Blair was visibly shaken was back in 2000 when tanker drivers held the country to ransom.If one thing could scupper the recovery it is the oil price.

Crude oil for May delivery hit a high of $85.89 a barrel at one point in New York trading the dearest since the peak of the financial crisis in October 2008.

The latest figures from the AA for last Wednesday before the latest duty hike came in showed average petrol pump prices at 118.07p per litre, with diesel at 118.67p a litre.

Be very aware when Cable makes a prediction

our future as a country depends much more on our ability to plan ahead for the next oil shock and the post-oil world.

Writing in the Daily Mail this morning,Vince Cable is predicting that a future oil shock could be just around the corner.

Motorists will have noticed that we are back up to £1-a-litre for unleaded petrol at many garages.
We may have not yet reached the heady heights of last summer, but the trend is unmistakable.
Even in a recession, there is the danger of inflation for some essential products such as petrol.
The reason he says is that whilst the West is in recession demand for oil continues to rise in both India and China

One indicator of growth

One indicator that recovery might be on the way is the rising oil price.

As the Economist notes

THE price of oil reached over $60 a barrel during intraday trading on Wednesday May 13th, its highest point since November. Glimmers of economic recovery, such as an increase in imports from China, together with a weak dollar and tight supply forecasts have pushed up the prices of many commodities.

Did the price of oil trigger the recession

Remarkable as it might sound the cheap price of oil in the 1990's may well have started a chain of events into which we are now being propelled.

That is at laest according to a paper presented at the Brookings Institution by James Hamilton.

Derek Thompson summarises it well in this piece at the Atlantic

Cheap gasoline from the 1990s into this decade encouraged families to set up their homes farther from the cities where they worked. But as the price of gas began to increase, it put a big strain of these families' commutes. With gas rising from $2 to $4, the price of these long drives doubled, straining those families' most expensive payments, namely: mortgages. When families realized they could not afford their exurban commutes, they sold their homes for a big loss. Voila: Their mortgage crisis became a bank crisis and the rest is our living history.