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Expensive oil will negatively affect economic
12 November 2007The price for oil has established the next record, having risen up to 98 doll./barr. on the background of fears concerning deficiency of the raw material, the weakening dollar and the neutral attitude of the Organization of the countries - exporters of oil (OPEC).
In this connection analysts mark, that, alongside with crisis of credits of a level subprime and delay of rates of the housing construction, developed in the market of oil the situation, can lead to the extremely undesirable consequences.
However, now the attention of the world financial markets is nevertheless connected with “rally” in the raw markets, and August crisis, or the set of these two factors. Taking into consideration with the developed situation the US Federal Reserve System has already twice lowered a discount rate in order to protect the world’s largest economy from the further negative influence of crisis. As ING experts mark, the prices for oil do not cause special fears. The macroeconomic of the USA has not suffered from such jump of the prices, and for the prices of actives oil has not had time to affect it yet.
Americans till now continue to buy sports cars and houses. Many experts consider that jump in the oil market will affect retail prices for energy and for consumers only when oil will reach a mark 150 of doll./barr.
Nevertheless oil is not the basic problem. Greater danger is hidden in delay of rates of housing construction and the further consequences of crisis of credits.
However the majority of economists assure, that the world economic system cannot so simply roll down before recession as it was after oil crises 1973 and 1979-80. That can really happen, so it is sharp growth of retail prices for the electric power that in turn can harm the consumption. The rise in prices on energy on 1 % will lead to reduction of consumption in the USA on 0,15 %.
Growth of the oil prices for 10 dollars can lead to decrease in growth of manufacture in the USA on 0,1 % and to affect economy of Eurozone. And thus inflation will grow on 0,2 percentage items.
However, analysts speak that while the prices for oil remain high basically because of a growing demand from China. If jump in the market of oil has been caused by deficiency of raw material and problems in the Near East, it would be much worse.
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