There is a useful and sobering overview in an FT column today of the normalized economic costs (in percentage of GDP terms) of the current high oil prices:
The increased expenditure arising from the doubling in oil prices to $60 over the past two years amounts to about 2.7 per cent of GDP for the US. Amongst other net oil importers, the second heaviest burden has been on Africa at 2.3 per cent of GDP, or nearly $32bn. Consider that the Group of Eight’s Gleneagles debt relief programme for 18 African countries would save these nations some $1.5bn per year. For Europe, Japan, Asia and Latin America, the doubling in oil prices has cost between 1.7 per cent and 2 per cent of GDP.
The overall net impact of this change in oil prices has been offset by other factors. But what if oil prices were to remain high over the medium-term? The impact one year ahead, for example, of a permanent change (from $45 this time last year) to today’s levels above $60, with all things constant, would be to cause GDP to fall by 1-2 per cent in South Korea, Taiwan, Turkey and South Africa and by up to 1 per cent in China, most of Europe, Japan and the US. The effect on already stressed current account positions would be to push the US deficit up by a further 1 per cent of GDP, with lesser deterioration in Europe, Japan and China – which have the advantage of running surpluses, and sizeable ones in the case of Japan and China. The overall net transfers from oil consumers to oil producers by 2007 are estimated at about $1,500bn – or nearly 3.5 per cent of world GDP. [Emphasis added]
It is tragic indeed that the region feeling the second-highest financial impact in the world in percentage terms — Africa — is the one least able to bear such costs.