Higher oil prices have hurt the global economy and could further hamper growth, bolster inflation and increase unemployment over the next two years if prices stay at their current levels, according to a study by the International Energy Agency released on Monday.
"World GDP growth may have been at least half a percentage point higher in the last two or three years," the study found, "had prices remained at mid-2001 levels."
If oil prices stay at their current level of more than US$35 a barrel, more than US$10 a barrel above their level of three years ago, "world GDP would be at least half of 1 percent lower -- equivalent to US$255 billion -- in the year following a US$10 oil price increase."
In New York, crude oil for June delivery rose US$0.83, or 2.2 percent, to US$38.21 a barrel on Monday.
The US, which still produces about 40 percent of the oil it consumes, would suffer less than other developed countries: The report forecasts a drop in GDP of three-tenths of a percentage point. Still, the agency found, continued higher prices would cause unemployment in the US to "worsen significantly in the short term."
For developed nations as a whole, the effect of higher oil prices would include a rise of one-tenth of a percentage point in the unemployment rate, a rise of five-tenths of a point in consumer prices for this year and a reduction in economic growth of four-tenths of a point for the next two years.
The report attributed higher oil prices, in part, to "supply-management policies" by the Organization of the Petroleum Exporting Countries, but it did not further explore the causes. At its most recent meeting, one month ago, OPEC members, led by Saudi Arabia, decided to restrain production further.
Saudi Arabia, according to the administration's data, has been America's largest source of imported oil over the past few years, but this year it has been replaced by Canada.
Saudi supplies of crude oil in January and February dropped by almost 20 percent compared with the same period last year.
OPEC's production cuts, Saudi Arabia's dealings with Washington and higher gasoline prices are now a staple on the presidential campaign trail.
These issues and the accompanying debate were on display here last week in a conference on US-Saudi relations sponsored by the Center for Strategic and International Studies and the US-Saudi Arabian Business Council.
Saudi Arabia's oil minister, Ali al-Naimi, said at the gathering that "prices are being driven by other factors" beyond supply and demand, including fears of instability, hedge fund investments in the commodities markets and refining bottlenecks, especially in the US.
Naimi said it was wrong to blame OPEC for higher prices and he offered to "invest in two new refineries" to address gasoline demand in the US.
But Kyle McSlarrow, the deputy secretary of energy, said the "price of crude is driving the cost of gasoline."
In a similar vein, Guy Caruso, the administrator of the Energy Information Administration, said at the conference that OPEC production cuts ranked higher as a cause for increased gas prices than tightness in the US refining market.
DETERRENCE: With 1,000 indigenous Hsiung Feng II and III missiles and 400 Harpoon missiles, the nation would boast the highest anti-ship missile density in the world With Taiwan wrapping up mass production of Hsiung Feng II and III missiles by December and an influx of Harpoon missiles from the US, Taiwan would have the highest density of anti-ship missiles in the world, a source said yesterday. Taiwan is to wrap up mass production of the indigenous anti-ship missiles by the end of year, as the Chungshan Institute of Science and Technology has been meeting production targets ahead of schedule, a defense official with knowledge of the matter said. Combined with the 400 Harpoon anti-ship missiles Taiwan expects to receive from the US by 2028, the nation would have
‘UNWAVERING FRIENDSHIP’: A representative of a Japanese group that co-organized a memorial, said he hopes Japanese never forget Taiwan’s kindness President William Lai (賴清德) yesterday marked the 15th anniversary of the Tohoku earthquake and tsunami, urging continued cooperation between Taiwan and Japan on disaster prevention and humanitarian assistance. Lai wrote on social media that Taiwan and Japan have always helped each other in the aftermath of major disasters. The magnitude 9 earthquake struck northeastern Japan on March 11, 2011, triggering a massive tsunami that claimed more than 19,000 lives, according to data from Japanese authorities. Following the disaster, Taiwan donated more than US$240 million in aid, making it one of the largest contributors of financial assistance to Japan. In addition to cash donations and
CLOSER TO CHINA: The upgraded Type-12 missile has a range of about 1,000km, compared with the original model’s range of 200km, and can reach mainland China Japan is preparing to deploy its first batch of domestically developed long-range missiles, with their launchers arriving at an army camp yesterday, as the country accelerates its offensive capability in response to rising challenges in the region. The upgraded Type-12 land-to-ship missiles are to be deployed at Camp Kengun in Japan’s southwestern prefecture of Kumamoto by the end of this month, completing the process of deployment, Japanese Chief Cabinet Secretary Minoru Kihara said without giving details. Army vehicles carrying the launchers and other equipment arrived past midnight in a highly secretive mission criticized by residents. Dozens of people stood outside of the
Minister of Economic Affairs Kung Ming-hsin (龔明鑫) yesterday assured the public that the nation is not facing an imminent power shortage as supply of liquefied natural gas (LNG) remains sufficient and there is no need to increase coal-fired power generation in the short term. Taiwan has secured 20 of the 22 LNG cargoes needed for this and next month, with the remaining two still under negotiation and expected to be secured soon, Kung said, urging the public not to worry. A sufficient supply of LNG supply means coal-fired generation should operate as normal, he said, describing speculation that the nation could face
RSS