Oil price 213% higher per barrel than in 2005
May 16 2008 12:35:00:143AM  - (SA)  
Candice Paine

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What does oil at $200 mean?

At the beginning of 2005 the oil price stood at $40 per barrel. A mere three and a halve years later, the price is approximately 213% higher at $125 per barrel.

The most commonly cited reason for this meteoric price rise is the increased oil demand (particularly from China and India) due to rising global economic growth and the fact that many believe supply has not kept pace.

The world has also become increasingly dependent on oil and in fact, most governments up until now have behaved as if it will never run out.

The fact is expensive oil has serious consequences, not least being rising inflation and slowing economic growth. As the oil price rises, net oil importers should see a demand for other goods drop as more disposable wealth goes on buying oil for transport and heating.

This however, is not always the case and workers often compensate by demanding higher wages to make up the shortfall. This sparks inflation.