If oil averages USD 120 per barrel in 2012, the global oil import burden – defined as total spending by net importing countries on net imports of oil – is set to reach a record high of over USD 2 trillion, or USD 5.5 billion per day, IEA Chief Economist Fatih Birol has said.
Oil price spikes have preceded each global recession since the early 1970s. Today, although the oil intensity (oil consumption per unit of Gross Domestic Product) of the global economy is less, prices still matter, particularly given the fragile state of the economic recovery.
Higher energy costs are reducing households’ purchasing power, forcing them to cut back on spending on other items or to increase their debt. "The current price levels are on average higher than the awful year of 2008, and as such have the capacity to tip the global economy back into recession," Dr. Birol said.
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