Will Rising Oil Prices Affect Your Mortgage Rate?

Oil Prices Vault Over $60 Mark to Trade at Record Highs Amid Concerns Over Supplies

VIENNA, Austria (AP) — Oil prices vaulted over the $60 mark Monday to trade at record highs amid concerns that supplies would not meet demand, especially in the United States, the world’s largest energy consumer.ADVERTISEMENT Analysts said with $60 a barrel no longer a threshold — and amid continued concerns about refining capacities — prices appeared set to go even higher.

After settling at $59.84 a barrel Friday, the front-month August contract for crude smashed through the psychologically important $60 barrier in heavy Asian and European trading on the New York Mercantile Exchange. By midmorning in New York, it was up 46 cents at $60.30.
Other petroleum products followed crude’s rise. Despite a traditional seasonal lull, heating oil was 1.66 cent at $1.6670. Gasoline surged to $1.6640 a gallon, up 0.83 cent.

See full article at http://biz.yahoo.com/ap/050627/oil_prices.html?.v=13

Here is what I think:
1 – higher oil prices will ulimately lead to higher prices across the board

2- higher consumer prices is equivalent to higher inflation

3 – inflation decreases the long term value of bonds

4 – decrease in the future value of bonds increases interest rates today

This is textbook logic, and while this may not unfold today, but consistent and persistantly higher oild prices will evetually start the chain reaction.

China is ramping up economically, India is ramping up economically – that is over 2 billion people demanding more and more oil EVERYDAY! Barring new technological developments new and more serious energy questions will arise in the early decades of the 21st century.

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