Effect of higher oil prices on world inflation

Journal Article · · J. Energy Dev.; (United States)

OSTI ID:7283787

Merklein, H A

This paper first examines the effect of higher oil prices on United States inflation and on world inflation, and it shows that the effect is relatively insignificant and of short duration. The second part of the paper discusses the effect of world inflation on the inflation rates in OPEC countries. It shows that this reverse inflationary effect is about equal in magnitude to the inflationary effect of higher oil prices. Because the reverse effect is a long-run phenomenon, it is potentially much more damaging to OPEC countries than the oil-inflation effect is to oil-importing countries. The GNP deflator is used throughout as an inflation index for two reasons: (1) it considers things other than consumer goods, notably capital goods, government services, and export-import goods, and this makes the GNP-deflator a broader measuring device; and (2) because this paper deals with exported inflation, to and from OPEC countries via price increases in export-import goods, the use of the GNP deflator greatly facilitates price-level impact calculations, without a compromise in accuracy. Mathematical calculations for the GNP deflator are given in an Appendix. Previous articles on the effects of higher oil prices in the US and the world have appeared in EAPA 01:344 and 01:346, respectively. How world inflation is affecting OPEC nations appeared in EAPA 01:1439. (MCW)

• Research Organization: Univ. of Dallas, Irving, TX
• OSTI ID: 7283787
• Journal Information: J. Energy Dev.; (United States), Journal Name: J. Energy Dev.; (United States) Vol. 1:1; ISSN JENDD
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
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294002 -- Energy Planning & Policy-- Petroleum
CHARGES
ECONOMIC POLICY
ECONOMICS
ENERGY SOURCES
FOSSIL FUELS
FUELS
INTERNATIONAL ORGANIZATIONS
MIDDLE EAST
NORTH AMERICA
OPEC
PETROLEUM
USA