“This is a wake-up call to the oil consuming countries and to the oil producers” – IEA’s Chief Economist, Fatih Birol.So far, so good. Appropriately dire, as befits the times.
The stability of the global economy is under threat due to oil prices entering a “dangerous zone,” according to the IEA’s Chief Economist, Fatih Birol.
Dr Birol’s warning follows new analysis from the IEA which found that oil import costs for member countries of the Organisation for Economic Co-operation and Development have shot up by $200 billion to $790 billion at the end of 2010.
The IEA analysis finds that this increase, triggered by high oil prices, is equal to a loss of income of 0.5 per cent of the OECD countries combined gross domestic product.
“Oil prices are entering a dangerous zone for the global economy” warns Dr Birol. “The oil import bills are becoming a threat to the economic recovery. This is a wake-up call to the oil consuming countries and to the oil producers.”
Despite a dip yesterday, oil prices have been climbing steadily in recent weeks, pushing close to $100 a barrel. On Monday Brent Crude reached $95 a barrel, its highest price for over two years, while the WTI price hit $89, up from $79 this time last year.
The analysis from the IEA, an energy policy advisor for its 28 member countries and beyond, also found that the European Union’s oil import bill grew by $70 billion last year. This figure is equal to the combined budget deficits of Greece and Portugal.
But the IEA has an agenda. It sees the solution to global economic instability in policies which discourage oil consumption, address "climate change," and promote sustainability. It ignores the true cause of oil price inflation and greatest reason for the present economic disaster unfolding: central bank pump-priming.