Oil prices may threaten global economic recovery, says energy agency

I wonder if I'm the only one reading this and thinking, "straw man identified!" Is the groundwork being assiduously laid to excuse another year of the Obama recession/depression?

from: Guardian: World News

As crude oil prices hit $95 a barrel, it is in a 'danger zone' which may derail recovery, says chief economist at Paris's IEA

Oil prices are entering the "danger zone" and threaten to derail the fragile global economic recovery, according to Fatih Birol, chief economist at the International Energy Agency.

The Paris-based government policy adviser calculates that the oil import costs for the 34 countries that make up the Organisation for Economic Co-operation and Development (OECD) soared by $200bn over the past year to reach $790bn by the end of 2010.

"Oil prices are entering a dangerous zone for the global economy," Birol told the Financial Times. "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."

The price of Brent crude hit $95 a barrel for the first time in 27 months on Monday. Although oil prices have fallen recently, analyst Sanford Bernstein is predicting that crude oil will average $90 a barrel this year, compared with $79.60 in 2010. Roger Read, an analyst at Morgan Keegan & Co, is predicting the oil price will range between $75 and $120 this year.

Birol said: "It is not in the interest of anyone to see such high prices. Oil exporters need clients with healthy economies but these high prices will sooner or later make the economies sick, which would mean the need for importing oil will be less." Birol believes that in the short term oil producers should increase production to bring down prices.

Opec officials recently said that they had no plans to change oil quotas.

Oil consumption will increase by 1.3m barrels a day, or 1.5%, to a record 88.8m in 2011, according to the IEA. Birol said oil consuming nations also need to play their part and reduce their reliance on oil.

The IEA calculates that the EU import bill rose by $70bn during 2010, equal to the combined budget deficits of Greece and Portugal. The IEA also says the ratio of countries' oil impo...

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