The Impact of Sustained High Oil Prices on Trade Flows

04-09-2007

The study analyses the impact of high oil prices on the European economy and examines policy options to support adjustment. Following macroeconomic and sectoral effects, as well as the impact on the EU's overall trade balance, the study looks at economic responses to high oil prices with an emphasis on trade policy instruments. While the main policy responses aim at improving fuel efficiency, fuel substitution and recycling, trade policy has an important complementary role in supporting the overall objective of reducing the energy intensity of European industry through environmental standards, low or zero tariff on environmental goods and by enhancing the EU's adjustment potential. The study concludes that overall, the need and scope for trade policy responses to high oil prices is limited. Still, policies that facilitate the adjustment of European companies, encourage consumers to save energy while help secure long-term energy supplies, are worthy of consideration.

The study analyses the impact of high oil prices on the European economy and examines policy options to support adjustment. Following macroeconomic and sectoral effects, as well as the impact on the EU's overall trade balance, the study looks at economic responses to high oil prices with an emphasis on trade policy instruments. While the main policy responses aim at improving fuel efficiency, fuel substitution and recycling, trade policy has an important complementary role in supporting the overall objective of reducing the energy intensity of European industry through environmental standards, low or zero tariff on environmental goods and by enhancing the EU's adjustment potential. The study concludes that overall, the need and scope for trade policy responses to high oil prices is limited. Still, policies that facilitate the adjustment of European companies, encourage consumers to save energy while help secure long-term energy supplies, are worthy of consideration.

Ulkopuolinen laatija

Judit Barta, GKI Energy Research & Consulting Edward Christie, Vienna Institute for International Economic Studies Miklós Hegedűs, GKI Energy Research & Consulting Mario Holzner, Vienna Institute for International Economic Studies András Oszlay, ICEG European Center Gábor Pellényi, ICEG European Center (editor) Magdolna Sass, ICEG European Center and Institute of Economics, Hungarian Academy of Sciences