Re: Chief Economist-potential fallout from high Oil prices

	Apr 1, 2011	Balkans News
	The surge in oil prices poses a threat to the fragile global economy, the International Energy Agency's Chief Economist, Dr. Fatih Birol, has said. A rising oil price represents a wealth transfer from oil importing to exporting countries. This will have an impact on the balance of payments for countries. (This is essentially a country's bank statement, which shows all transactions with other countries throughout the world). With importing countries spending more on oil, the balance on their accounts can be badly affected. Rising oil prices will also drive up inflation as the cost of oil has a knock-on effect on many other products, such as transport fuels and food. While energy-producers stand to gain, high prices will put downward pressure on global economic growth which is in nobody's interest in the longer-term, he explained at a meeting in Paris on 22 March. "The overall impact will depend largely on the extent of the price increase, its persistence, monetary policy response, and how producers spend their windfall revenues," he added. Oil prices began rising significantly in September 2010. By early March Brent crude was trading at around USD115 a barrel, while the WTI was around USD100 a barrel. Global impact On a positive note, he observed that the world on average is now using half as much oil per unit of Gross Domestic Product (GDP) – a country's annual economic output – than compared with 1971. This shift is due to efficiency improvements in how energy is consumed, as well as changes to the structure of economic output. The consequence of the efficiency savings as well as less economic reliance on energy means that prices of products – though affected – are not affected by a hike in oil prices as much as four decades ago. Despite this change, Dr. Birol stressed that oil prices still affect the global economy, with countries with high import dependency the most vulnerable. He added that "spikes in the price of oil have played a role in each global recession since the early 1970's." Importers If oil prices average USD100 a barrel through all of 2011, the amount spent on oil imports by OECD countries will amount to 2.3% of the region's GDP. For each further USD10 increase in the cost of a barrel of oil, spending rises by 0.2% of GDP of OECD countries. "If high prices remain, then the amount spent on oil by the big importing OECD nations will be more or less equal to what they spent in 2008, when the world was plunged into an awful economic crisis," Dr. Birol said. Looking at China, if the price of oil averages USD100 a barrel this year, China will have to spend USD206 billion on oil imports in 2011 – over USD50 billion more than it did last year – which will add to inflationary pressures. Exporters Yet, while high oil prices are having an obviously negative impact on importing countries, exporting nations are benefiting. IEA analysis indicates that if oil prices stay above USD100 a barrel on average for the full year, OPEC oil export revenues are set to exceed USD1 trillion in 2011 – a record high. Similarly if prices remain high, Russia is set to earn USD355 billion in oil and gas export revenues, which exceeds 20% of its GDP.

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Scott's Contracting
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Citizen Lobbyists Chalk Up Conservation Successes

 

Conservation Lobby Day A Huge Success! Thank you to all who attended Conservation Lobby Day on Tuesday, March 29th in Jefferson City.  With over 80 concerned citizens in attendance, we educated over 115 state legislators on key environmental issues and challenges facing our state, including: Advancing Renewable Energy and Energy Efficiency Policies Protecting Water Quality Upgrading State Parks Building Green with LEED Certification Visit our website for more information on these bills, including our Lobby Day fact sheets. This annual event convenes citizens who represent a diversity of conservation interests, from environmentalists, scientists, students and business owners to hunters, anglers and farmers. MVC is once again co-sponsored this Lobby Day with Missouri Coalition for the Environment and Missouri Sierra Club. Support Lobby Day and other critical MVC programs by making a one-time or recurring donation today!

Missouri Votes Conservation (MVC) is the only conservation organization in Missouri that represents all sectors of the conservation community, including environmentalists, small business owners, hunters, anglers, scientists, farmers, and students.  It is also the only organization that focuses on the political arena to achieve sound conservation practices. MVC is a non-partisan, statewide non-profit corporation affiliated with the League of Conservation Voters, a widely respected national organization that advocates for the environment through legislative channels. Privacy Policy

   

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Scott's Contracting
scottscontracting@gmail.com
http://stlouisrenewableenergy.blogspot.com
http://scottscontracting.wordpress.com