Fuel for our foreign policy
Higher Oil Prices Are Damaging Global Economy, a Study Shows
By JEFF GERTH
WASHINGTON, May 3 - 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 (PDF) released on Monday.
"World G.D.P. 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 $35 a barrel, more than $10 a barrel above their level of three years ago, "world G.D.P. would be at least half of 1 percent lower - equivalent to $255 billion - in the year following a $10 oil price increase."
In New York, crude oil for June delivery rose 83 cents, or 2.2 percent, to $38.21 a barrel on Monday.
The United States, which still produces about 40 percent of the oil it consumes, would suffer less than other developed countries: the report forecasts a drop in G.D.P. of three-tenths of a percentage point. Still, the agency found, continued higher prices would cause unemployment in the United States 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 2004 and a reduction in economic growth of four-tenths of a point for the next two years.
