American consumers can do a world of good this holiday season

We are getting close to the end of the year, and the question that seems to be on top of everyone's list every single week is when will oil hit the $100 per barrel mark.

There is little question it is no longer a semi-mythical price ceiling that always seemed far beyond the reach of the market. Now, it is practically an inevitability.

But the question remains, when will it hit?

Newspapers keep updating their oil information with the understanding that sooner, rather than later, oil will hit the $100 mark.

But as I look at what impact $98 per barrel oil is having, I'm surprised at how resilient shoppers, businesses and even nations are. However, I also wonder how long it can last.

In America, where the Christmas shopping season kicked into high gear the day after Thanksgiving, spending was 3.5 per cent lower, than the same day the previous year.

But considering the blows the US economy has taken from the subprime lending problems, and the related housing market woes, US consumers seem to be continuing to spend money on everything from gasoline to this season's top holiday buy, the digital photo frame.

However, it is crucial that sales stay strong for November and December, as the two months represent 20 per cent of retailers' annual revenue and the fourth quarter accounts for almost a third of retailers' annual profit.

So who cares if Americans keep spending their dollars or not?

No matter how you feel about US policies, their economy still carries a lot of weight on the international block.

And if the US falls into recession, pains will be felt in Europe, through the Middle East, and on to Asia.

There is little question that worries about the US economy have also hurt overseas stock markets, and the Dow Jones World Index is off more than seven per cent this month, after US companies are excluded.

And considering that America is also China's largest export market, any decline in spending on things like Chinese-made digital photo frames will hit the massive Asian nation and other emerging economies which depend on US consumption of imported goods.

But it isn't just shopping to worry about. According to a Japanese government report, financial institutions there lost as much as $2.1 billion from investments in sketchy US housing loans during the first half of 2007.

So, how does this all tie into oil?

American spending, or their lack thereof, is closely linked to how much they are spending on required goods like gasoline, for all that driving back and forth between malls, and heating oil.

Right now, prices of both are going through the roof on the back of record crude oil prices.

Even food prices have taken a bump, as gasoline prices have driven up the cost of getting those goods to market.

The last thing the rest of the world needs is the US going into a recession because American consumers are scared to spend because of the price of oil.

Sure, they may well survive any US downturn, but almost everyone will feel the pinch.

If Asia is exporting less to the US, and they are still paying through the nose for oil, they're going to take a double hit. In turn, they will probably import less from Europe, which is not going to make the European Union very happy.

So, let's hope that the Americans continue to ignore how much their SUVs cost to fill up and continue driving to the malls this holiday season.

Newspapers keep updating their oil information with the understanding that sooner, rather than later, oil will hit the $100 mark.

The writer is a freelance journalist based in Alaska, USA.