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Goldman: Oil price increases manageable, won’t disrupt US economy

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According to a report from Goldman Sachs analysts, the recent 30% increase in crude oil prices is unlikely to have a negative impact on U.S. consumer spending or GDP growth. The report suggests that the magnitude of the price increase is relatively small, and any negative effects on GDP will be partially offset by lower electricity prices. Furthermore, the analysts believe that the Federal Reserve is unlikely to adjust its monetary policy in response to the higher oil prices. Goldman Sachs also notes that a significant portion of the rebound in oil prices has already occurred.

However, some industry leaders have expressed concerns about the potential consequences of elevated crude oil prices. Continental Resources CEO Doug Lawler warned that prices could reach the range of $120 to $150 per barrel without new production, which he believes would send a shock through the system. Chevron CEO Mike Wirth echoed these concerns, stating that more price pressure is imminent unless policies are implemented to encourage additional production. Despite these concerns, current data reveals a contraction in oil production in U.S. shale fields, with government analysts predicting a third consecutive monthly decline in October.

In summary, Goldman Sachs analysts believe that the recent increase in crude oil prices will not negatively impact the U.S. economy, particularly consumer spending and GDP growth. They argue that the price increase is relatively small, and any adverse effects will be partly offset by lower electricity prices. However, industry leaders, such as Doug Lawler and Mike Wirth, have warned that prices could continue to rise without new production, potentially leading to a shock in the system and increased price pressure. Current data also shows a contraction in oil production in U.S. shale fields.

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