Tonight:
9°c
Sentance warns of oil price shock
21.09.09
The oil price will stay high for the next decade and could be the cause of the next "big global shock" in the worldwide economy, according to Andrew Sentance, one of nine economists at the Bank of England charged with keeping a lid on inflation.
In a speech to energy industry economists in London today he said: "I can see substantial upside risks to [energy] prices over the coming recovery as demand picks up across the global economy and Asia plays a leading role in the growth of the world economy. Against the background of supply constraints, this creates the potential for continuing price volatility.
"I do not see supply developments and environmental policy moves changing the energy price environment until much later in the next decade." The price of oil has been at or around $70 a barrel for the past two months.
Sentance, a member of the monetary policy committee, added: "If [economic] stability does return, we need to be looking very carefully to see where the next big global shock might be coming from. The energy market is one of the prime candidates."
