Weak Energy Demand May Signal a Much Bigger Economic Problem

With the recent closure of the Strait of Hormuz, many expected oil prices to spike and stay high. Instead, they have barely budged. The latest spike in prices is a mini spike. If these oil prices were adjusted for inflation, the spikes in the past would appear even higher. Figure 1. Weekly average oil prices for West Texas Intermediate oil in a chart provided by EIA, with Iran conflict price spike circled. This is not a new problem. Looking at energy data going back to 1820, low demand (affordability) has repeatedly produced financial crashes,…