Fears Grow High Oil Prices Will Hit World Economic Growth

14/09/05

Fears grow high oil prices will hit world economic growth
By Brian O'Mahony, Chief Business Correspondent



FEARS are growing the 44% hike in oil prices over the past year will damage global economic growth.

Business in the US is getting pessimistic as oil per barrel hovers around $64 per barrel.

Pfizer Inc chief executive, Hank McKinnel, said: 'If oil prices remain high, consumers will be forced to continue to spend more on petrol and heating oil, and this could trim other expenditures.'

Hurricane Katrina and soaring energy prices may take the steam out of a worldwide rebound in manufacturing economists were counting on to spur growth later this year.

The hurricane is compounding the effect of the higher fuel costs that had started to weaken consumer demand and undermine manufacturing in August.

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Meanwhile, global oil production is near peak and is set to decline within a few years, a report warns.

This at a time when demand from 85% of the world is still rising while it is estimated a third of the world's oil now comes from declining oil fields.

Serious measures must be implemented to cut demand according to the report: 2007: Solving Peak Oil, which outlines the technical and policy steps needed to meet the challenge. It attempts to cope with the impending crisis and argues that tried and tested and cost-effective technologies can be implemented quickly to reduce oil consumption.

If done in line with falling oil supplies, it can prevent a major disruption of global transport without major disruption to society.

By 2010, oil production will have fallen to 82 million barrels of oil per day (mbpd) from 85mbpd at present.

It will be 65mbpd in 2020. Half of global oil consumption is used by the transport sector and the majority of that on our roads.


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