Global Finance: Consequences of Rising Oil Prices

Oil prices have been volatile, moving from more than $100 per barrel in 2014 to $27 in 2016 to more than $75 today. Oil producers with budgets depending on oil revenue like Venezuela could benefit. Still, global growth depends on stable energy prices, and high oil prices could trigger inflation and threaten emerging economies, which are both more energy intensive and less energy efficient than advanced economies, explains Laurence Neville for Global Finance. Neville also explains that the specific reasons behind the higher prices matter: If accompanied by higher growth, emerging economies could endure. But higher prices combined with tariffs, protectionist policies, subsidies and geopolitical tensions are problematic. Another challenge: Rising oil prices could encourage development of renewable energies and electric vehicles. “The risk for the oil industry – and the opportunity for EVs – is that oil would come to be seen as unreliable,” Neville concludes. Wild price swings could add to that perception. – YaleGlobal