Wescott Report is from April 2006. A little over 2 year old.
Robert could not foresee the following factors:
Robert could not foresee the following factors:
(1)Plateau of global oil production
(2)Federal Reserve going on a US$ printing binge
(3)Limitation of global refining capacity
(4)Speculation
There has been no coordinated terrorist attacks in last 2 years and yet oil is over $120/barrel.
Some of us maybe thinking that, there will be no negative consequences on Global Economy due to $120/barrel of oil
and it is just another number. Robert F. Wescott thinks otherwise. His thoughts are:
Stock market valuations would likely fall more than they did after the Kuwait invasion or after 9/11. Given the negative confidence effects and negative supply effects,the global recession would likely be severe.
What would $120 oil mean for the Global Economy
http://www.secureenergy.org/reports/westcott_report.pdf
http://www.secureenergy.org/reports/westcott_report.pdf
Info about SAFE:
Securing America's Future Energy (SAFE) works as a nonpartisan,
not-for-profit organization committed to reducing America's
dependence on oil and improving U.S. energy security in order
to bolster our national security and strengthen the economy.
not-for-profit organization committed to reducing America's
dependence on oil and improving U.S. energy security in order
to bolster our national security and strengthen the economy.
The Wescott Report
This report gives an overview of the broad economic effects of
a scenario in which oil prices surge to $120 a barrel due to
coordinated terrorist attacks on global oil transportation
infrastructure. It is not intended to be an exhaustive analysis.
This scenario was the basis for a simulation exercise conducted
by Securing America's Future Energy (SAFE) at the World Economic
Forum Annual Meeting 2006 in Davos, Switzerland.
This report gives an overview of the broad economic effects of
a scenario in which oil prices surge to $120 a barrel due to
coordinated terrorist attacks on global oil transportation
infrastructure. It is not intended to be an exhaustive analysis.
This scenario was the basis for a simulation exercise conducted
by Securing America's Future Energy (SAFE) at the World Economic
Forum Annual Meeting 2006 in Davos, Switzerland.
Summary
If oil increased to $120 a barrel and stayed there for a year because of coordinated
terrorist attacks on oil facilities, the world's oil bill would be about 8% of
world GDP (even assuming some reduction in the quantity of oil demand) - higher than
at any time in modern history. Such oil prices would almost certainly precipitate
a global recession. In addition to negative demand effects, there would be large
negative supply side effects, policy effects, and confidence effects. Meanwhile
financial markets would likely judge these attacks on global energy supplies more
seriously than Iraq's 1990 invasion of Kuwait of the 9/11 attacks, because of
their continuing disruptive effects. Stock market valuations would likely fall
more than they did after the Kuwait invasion or after 9/11. Given the negative
confidence effects and negative supply effects,the global recession would likely be
severe.
terrorist attacks on oil facilities, the world's oil bill would be about 8% of
world GDP (even assuming some reduction in the quantity of oil demand) - higher than
at any time in modern history. Such oil prices would almost certainly precipitate
a global recession. In addition to negative demand effects, there would be large
negative supply side effects, policy effects, and confidence effects. Meanwhile
financial markets would likely judge these attacks on global energy supplies more
seriously than Iraq's 1990 invasion of Kuwait of the 9/11 attacks, because of
their continuing disruptive effects. Stock market valuations would likely fall
more than they did after the Kuwait invasion or after 9/11. Given the negative
confidence effects and negative supply effects,the global recession would likely be
severe.
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