Impact of World Oil Price Change
Autor: Adnan • August 17, 2018 • 1,289 Words (6 Pages) • 549 Views
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Table 3.2 further clarifies the numbers. It shows that from the current growth rate of 6.6 percent in 2005 and it would have gradually increased to 8.07 percent with the baseline scenario. Under reduced oil demand (ROD) scenario growth rate falls to 5.17 in 2007 and it will be at 6.2 percent in 2020. If, however, the current oil prices (at $70 per barrel under BAU scenario) remain as it is the growth rate will fall further to 5.67 percent by 2020. The supply shock scenario (SUS) under with
alternative fuel can be found, growth rate falls until 2007 and then it picks up up to
6.17 by 2020 and under PKO scenario (peak oil demand) growth rate falls to 5.47 percent, the lowest.
Table 3.3: GDP of Bangladesh under different world oil price scenarios
BASE
ROD
BAU
SUS
PKO
in million taka
2005
2935395
2935395
2935395
2935395
2935395
2007
3334721
3241964
3241964
3222585
3241964
2011
4171037
4010350
3988886
3957802
3955012
2015
5291286
5003048
4896415
4896416
4814147
2020
7508588
6656256
6394751
6480621
6209113
Average
4648205
4369402
4291482
4298564
4231126
% change
-5.99
-7.67
-7.52
-8.97
In terms of GDP of Bangladesh, Table 3.2 shows that between baseline scenarios GDP of Bangladesh falls by 5.99 to 8.97 percent due to oil price increases.
- Impact on Poverty
Oil price increase leads to domestic price increase through a) increase in prices of importable, and b) increase in the cost of fuel within the economy and thereby affecting the domestic prices. This will affect the poor people. Consequently, the process of poverty reduction will be affected
Table 3.4: Population living in extreme poverty under different price scenarios
BASE
ROD
BAU
SUS
PKO
2005
31027.13
31027.13
31027.13
31027.13
31027.13
2007
28220.97
28987.81
28987.81
29153.44
28987.81
2011
24052.46
24967.50
25095.14
25282.43
25299.36
2015
20226.41
21332.35
21773.64
21773.62
22127.09
2020
15493.60
17373.34
18047.90
17820.54
18560.33
Source: BANSIM II simulation results. (numbers are in thousands)
Table 3.4 presents the number of individuals (in thousands) under different world price scenarios. It shows that compared with the base price scenario, under reduced oil demand scenario, 1.8 million people will slip into poverty by 2020. This means that compared with the prices of oil as of 2002 (the base scenario), under reduced oil demand, addition 1.8 million population cannot leave the poverty cycle in Bangladesh. However, if the oil prices remains as it is (current level of 70$ per barrel), an additional 2.5 million people will fail remain trapped into poverty. This number will rise to 3 million under the peak oil demand price scenario when oil price (Figure 3.3).
Since 1990 Bangladesh has succeeded in reducing its poverty by 1% annually and this is required for achieving its MDG goal. All these gains will be halted in future due to rising prices of oil. Considering this, world oil price increase will have a significant effect on the success of MDGs for Bangladesh.
- Impact on Government
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