The fall in Jamaica's consumer confidence is mirrored by a fall in US consumer confidence as measured by the University of Michigan Consumer Sentiment Index, also prepared by Professor Richard Curtin, which dropped 3.4 points in June as tax rebates failed to lift spirits. The index came in at 56.4, down just slightly from the preliminary 56.7, but down more substantially from May's 59.8, and the lowest reading since May 1980. The decline from May was much larger for the current conditions component, although expectations also fell. Inflation expectations levelled off, albeit at high levels.

Will the price of oil rise to US$250. or fall to US$50?

A quick glance at the international scene reveals the causes of the rocketing prices of fuel and food are largely fundamental - namely strong demand driven by rising living standards in Asia, and a past failure to invest in extra production capacity, with what is likely to be only a limited impact from "speculators".

These price increases hit developed country consumers like heavy tax increases - except that the money levied on them is largely going to producers of scarce commodities such as Russia and Saudi Arabia.

The respected British columnist Anatole Kaletsky says that oil prices above US$100 a barrel are redistributing "some seven per cent of global GDP, roughly US$4 trillion per annum, from the stable societies of America, Europe and developing Asia to potentially hostile regimes.

In the developed world, the public won't be forced to cut their purchases of other goods and services by much as this would precipitate a particularly nasty global recession. Instead, the authorities will seek to print their way out of trouble, particularly in the US where the Fed will be forced to save its financial sector.

For country's in the non -oil developing world such as Jamaica, where food and fuel are a much higher proportion of household budgets, the negative impact will be significantly worse.

The key price to watch is oil.
Alexei Miller, the head of natural-gas giant Gazprom, says he expects the price of crude to nearly double, to US$250 a barrel, within the next 18 months. Goldman Sachs Argun Murti, the energy strategist who back in 2005 correctly forecast prices would top US$100, now predicts a new "superspike" of US$200.

Certainly temporary factors such as summer demand in the US for energy to fuel cars and power airconditioners, Olympics-related demand in China, and continuing speculative/investment interest, argue against any immediate collapse in the price of crude, which could rise significantly higher over the next few months.

However, this rise should contain the seeds of its own demise, as a genuine global slowdown will mean that instead of oil prices soaring to US$200-250, the oil price will fall back post summer, all depending on the geopolitical situation.

This is because oil consumption in the advanced economies actually fell last year, with all the growth in oil demand coming from developing countries, of which half came from China.

This year American demand is forecast to shrink by a third-of-a-million barrels a day, Japan is seeing a major shift from travel by car to travel by rail and bus, and China's demand growth, is expected to drop once Olympics-related stockpiling comes to an end.

A critical change is that those developing countries which have been subsidising fuel prices heavily are starting to cut those subsidies because of budget strains.

The International Energy Agency now forecasts that world oil demand growth will be down to 0.9 per cent this year. This should shrink next year as the "second-stage effects" of the credit crisis depress economic growth and even bring about recession.

On the supply side, the cuts by the OPEC oil cartel that prevented any overall increase in global production last year have been reversed. There is considerable controversy over the impact of speculation, but once it is clear that oil has topped out, the support speculators have provided for oil prices will disappear.

Nevertheless, the following problems on the supply side will continue to underpin oil prices.

Production from the big older oilfields is declining, in some cases faster than expected, and no equivalent large, cheap deposits are being found.

International oil companies are prevented from using their technical and managerial skills to develop supplies from countries that have most of the world's reserves, such as Saudi Arabia, whilst the usually state-owned national oil companies that do have access to those reserves have for the most part proved unable to expand production.

Oil deposits readily accessible to international firms are increasingly expensive to develop because they lie deep under the sea, are in harsh climatic conditions, or have unpleasant characteristics that make them expensive to process, such as high sulphur content. And the costs of equipment to find, tap and transport crude, and of the geologists, engineers and managers needed to do that, have soared because of shortages.

So whilst the prices of oil and related energy resources will probably fall significantly from current levels either later this year, or early next year, crude is unlikely to go much below $100 a barrel.