‘Skyrocketing oil prices may derail economy’

Skyrocketing crude oil prices in the global market that touched an all-time high of $92 per barrel in the New York market on Friday due to rising US-Iran tension, pose a great concern to the economy of oil-dependent countries like Pakistan in near future.

Economists, while expressing their opinion to Daily Times, were in unison to say that the direction of a country’s economy depends on the movement of oil prices whether they go up or down. If oil prices move up persistently, then it will have a negative on the country’s progress as it has been forecast that the oil prices may jump above $100 a barrel if the market continues its jittery over the US move. And, all government’s efforts to stabilise the economy would result in naught.
“Oil is the lubricant of economic expansion. A high oil price just makes it more expensive for companies to operate,” said an economist requesting anonymity.

A high price for oil makes it more expensive for companies to transport goods from one place to another, and makes it more expensive for consumers to fill up their cars, and therefore they’ve got less money in terms of disposable income, he added. This importance makes the commodity one of the key aspects that economists look towards when judging consumer behaviour that in turn shapes business’ plans.

This is not just it; high oil prices will show their harmful impact in a number of ways. Power production will become far more costly as furnace oil prices may shoot up. Industrial production will cost more. The prices of furnace oil stood at Rs 29,799 per tonne following a sharp surge of more than Rs 2,000 during the current month.

Definitely, costs of running all means of transportation will high substantially. Railway fares will go up and airlines will raise their fares substantially. Agriculture sector will also hurt owing to the power rate for tube wells will go up making farm output far more costly. Higher power rates will affect the service sector including hotels, restaurants and shops. Power for schools, colleges and universities will cost far more.

All in all cost of living will be higher as the all the food items and essential necessities will become dearer due to the hike in oil prices.

Daily Times