Falling oil prices

November 12, 2008

I have recently seen comments by various economists and politicians that low oil prices are good, that they are to be welcomed. It is worth debating this claim. So firstly, why do some people believe that low oil prices are good? Low oil prices reduce inflation for so long as they are low. This allows central banks to reduce interest rates (if other causes of high inflation are also absent). Reduced interest rates are a necessary condition for economic growth. ...