Oil prices could ruin economic growth

Oil price rises beyond $80 a barrel are inevitable, and will cause a profound effect on the US economy, a statement released today intimated.

US Energy Secretary Sam Bodman stated that prices in the region of $80 a barrel could hinder economic growth, and lead to inflation in energy prices and consumer products.

Analysts have forecast $80 per barrel prices with some certainty, as output problems across the world and the perceived limited supply have caused a demand-intensive marketplace, paradoxically with spare capacity.

The US Energy Secretary urged OPEC and major worldwide nations to step up production, which is still well short of capacity despite prices reaching a record high during the week.

Many analysts have blamed a shortage of oil in relation to world demand for the wildly escalating prices over the last few weeks, a claim that OPEC has fiercely denied.

Rapidly growing demand from China and India, as well as general worldwide growth trend have been thought to be contributing factors to the escalating prices of crude oil per barrel.

The OPEC perspective was further emphasised by Qatar’s Oil Minister Abdullah al-Attiyah, who claimed there is currently no shortage of crude oil on the world market.

OPEC, responsible for 40% of crude oil production, are set to meet later this quarter to decide the future of oil production, and whether or not to increase production in order to better meet their $65 barrel price tag.

Oil prices have shown steady growth over the last few months, particularly spurred on by problems in US oil refineries and growing demand from newly industrialised Asian nations.

Analysts’ forecasts show continued rises over the course of this year, which is likely to have a drastic effect on global economic growth.

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