With Oil prices rising so fast and the Dollar dropping, will there be a World Recession in 2008?

quite possiblyWith Oil prices rising so fast and the Dollar dropping, will there be a World Recession in 2008?
i think the real problem is the fact that fosil fuels are a limited resource. i belive there are enough reserves for about 40-50 yearsWith Oil prices rising so fast and the Dollar dropping, will there be a World Recession in 2008?
Quite possible, never mind we've had a good ride, now time for a reality check and for all Americans to buy fuel efficient cars!
I personally don't believe so for the following reasons:





(1) Oil prices, contrary to what everyone is saying, are actually not that high. Although the nominal price of oil has gone up, the real price is still well below the historical high of $99 in 1980 (in 2006 dollars). Yes, we're getting closer to that mark -- oil is currently trading at $81. In other words, prices would have to up an additional 22% before they truly hit their historical high. Will that happen eventually if we don't change our energy demands? Absolutely, since oil is a limited resource. However, I don't think there's any chance of that happen in 2008. Why? Because...





(2) The price of oil is kept artificially high by OPEC. As a cartel, OPEC rigorously controls the price of oil...and right now they are holding back supply on purpose because it helps keep the price up. If we start to see effects of high oil prices slowing economic growth, OPEC would likely increase their production since a slowdown in economic growth would cost them a lot of money. OPEC's strategy will always be to keep oil prices as high as they possibly can without triggering a slowdown in world economic growth.





(3) The falling dollar will have little to no impact on whether there will be a world recession -- there's simply no correlation. Besides, the price of the dollar will at some point bounce back: if the dollar, which is an extremely stable currency, gets cheap enough, central banks will increase their holdings of it. Supply and demand kicks in, and the price starts to rise again. In the long-run, you might see the Euro replace the dollar as the de facto global currency, but that's still a long way away.





Hope that helps!