Why this domino effect in the USA economy?

I could not disagree with Infernal Disaster more.

One of the main factors for $200/barrel oil is speculation that the dollar will continue to drop in value. Let's remember, oil is sold on a global scale in US currency only. Europe bids 64 cents to our dollar on oil. $200 a barrel here is about $128 a barrel for them.

While on the topic of Europe, it is a fact that they pay a significant amount more per gallon at the pump because it's used to fund national healthcare, government paid higher education, etc. But we must not forget that Europe also has a more sophisticated system of mass transit than the US does and it's quite popular.

Economically, there's more to the domino effect than just gas prices. Everything you stated is correct but when you pile the ethanol mess on top of it (food for fuel), suddenly it trickles down into more expensive feed for livestock which means beef and chicken cost more. Eggs are more. Dairy products are more. Rice and wheat prices raise to match and then you factor in the added cost to transport the now price-inflated food products.

As prices increase, the average American's pay remains steady to what it was a year or even two or three years ago which means those workers are working for 20% less wages today.

Trying to save every penny, consumers look for the cheapest products, usually foreign made (Walmart) and the demand for US created goods declines due to the higher cost (including petro byproducts). As that cycle continues, US companies are forced to cut costs which includes downsizing and adding to the unemployment pool, hiring/exploiting illegal labor or moving out of country where labor is cheaper.

It's a terrible snowball or domino effect and we're slowly spiraling out of control.

Edit: I never said the dollar would drop that far, I said that's one of the main factors for speculation. Oil is bid on, with the Euro being more valuable that the dollar, "part" of the cost increase is us upping the ante to ensure we get the oil. The further the dollar declines the higher we have to bid. It is part of the reason. Not the sole reason; but one of the factors. I'm guessing with your economics expertise you feel the current per barrel cost has nothing to do with the decreased purchasing power of the dollar? That or you completely misread what I wrote.

Just about everything takes energy to produce. Many products are made from petro by-products. Transporatation of goods to market, heating, cooling. You name it, it probably has an energy or oil component. Hence, the cost of everything goes up. This means people get less for their money and that squeezes sales and economic activity. And businesses need energy and pay more for it at the same time people are buying less. It's a bummer all the way around.

$200 a barrel oil will make it tough for our producers and consumers to continue a growth orientated economy but remember, people always find a way to survive and prosper, especially in a free market. Necessity is the mother of all invention. hooray for capitalism!

Smarter Than You Are:

Apparently you are not as smart as you like to think you are.

Method of conversion is irrelevant, the price gas in Europe is still nearly triple what is in the US (in equal amounts) as a result of high taxes. As someone correctly pointed out, taxes that our used to pay for socialist programs.

"when this happen, USA might be in a social, political and economical disaster''

As long as it's an economical disaster. Everyone likes a bargain, even on disasters.

If prices got to $200/barrel, Americans could take their mind of their troubles by watching Europe start to descend into chaos as the their socialist economies crumble before their very eyes while wait for the government to resume drilling for oil.

People in the US think they have bad, but they have it no where near as bad as those in Europe who have used gas taxes as means to pay for their welfare states.

Unlike Europe, the US could resume offshore/in drilling in such an emergency to lower prices. Europe has no solution.

the previous answers prove that the right wing know NOTHING about socialism......europeans pay more because they buy gas by the litre....idiots...

the USA is in a slow sinking spiral.....we cant help ourselves, we are collapsing.