Oil price increase will be felt quickly
An oil well near Long Beach, Calif.
TEXT OF STORY
Kai Ryssdal: You can measure oil a couple of different ways, depending on the market you're talking about. But either way, we're seeing prices we haven't seen in a couple of years. Crude in New York was up 6.5 percent today -- $95.42 a barrel. That's U.S. prices, of course.
In Europe, they're paying even more: Almost $109 a barrel today, even though OPEC has promised uninterrupted supply, and as Steven LeVine was just telling us, there's the spare capacity to do it.
Funny thing is, we have those different prices even though the world is really just one big global oil market. And eventually, as they always do, those prices are going to trickle down. From New York, Marketplace's Alisa Roth reports.
Alisa Roth: It looks like most of Libya's oil supply is still intact. And OPEC keeps promising the oil will keep flowing.
Michael Lynch is president of Strategic Energy and Economic Research, which is a consulting firm that specializes in the energy markets. He says even so, the whole world will start feeling higher oil prices, very soon.
Michael Lynch: You're going to find that most economies will be facing higher prices within a week or two. Beyond that, the inflationary effects in other industries will start to filter through within two to four weeks.
It'll start in the obvious places: gas prices, the airline industry, trucking, shipping. And then spread to oil-heavy industries like plastics and fertilizers. That last could eventually translate to even higher food prices.
In this global economy, Lynch says nobody will be spared. But places like Taiwan, South Korea and Japan -- which import almost all of their oil -- will feel it more. China may be protected for a little bit longer. It still produces much of its own oil supply.
Amy Myers Jaffe is a professor at Rice University, specializing in energy issues. She says the effects will also be different in China because they use oil differently than we do.
Amy Myers Jaffe: The cost for commodity, raw materials for their industry is what's going to affect them. Whereas here in the U.S., there's really a big consumer effect. And the psychological effect among consumers and that's going to be a bigger impact here.
She says the psychological effect of high prices could be as bad here as the real effect, and have real implications for the ongoing recovery.
In New York, I'm Alisa Roth for Marketplace.