Oil price surge in world market is threatening the Australian economy with tourism decline and investment in caution, economic experts said.
Oil price rose by almost 11 U.S. dollars (11.45 Australian dollars) a barrel in the U.S. on Friday, defying predictions they were about to fall and deepening the growing tension between the world's big oil exporters and consuming countries.
Oil prices made their biggest single-day leap ever Friday-clearing 139 U.S. dollar per barrel.
Motorists in Australia are expected to face petrol prices as high as 1.70 dollars a liter within days and more than 1.80 dollars a liter in the next few weeks. Canberra petrol prices were about 1.63 dollars a liter during the weekend, 10c more than the May average, but are tipped to move towards 1.80 dollars a liter this week and possibly 2 dollars by the end of the year.
As oil prices going up, the airliners have decided to cut down flights both at home and abroad to ward off the economic losses, but that would hit a blow to the local tourism industry.
Soaring fuel prices and union-driven wage claims have led the largest airline company Qantas to dump 14 weekly flights from Tokyo to Cairns. Jetstar is also scheduled to stop flying to the area from Osaka and Nagoya in December.
In Queensland, tourist numbers have been in decline for some time and will only get worse, operators warn.
"Australia may not be an oil exporter but we are a big energy exporter. But oil prices are starting to weigh increasingly heavily on the economies of the rich world, raising the risk that Australia's continuing good fortunes may finally be running out," Access Economics director Chris Richardson said on Sunday.
While adding weight to the argument that oil is fast moving in on gold's turf as the investment opportunity of choice in uncertain economic times, the increasing volatility in the oil price has also sparked fears that investors risked losing significantly should the bubble burst.
"We believe investors should be very wary of these sorts of prices," said Craig James, chief equities economist at CommSec, pointing to the price of gold, which has fallen significantly since breaking through the 1000-dollar-an-ounce barrier earlier this year.
"This is a very, very over-heated market, and you're really playing with fire if you start diving in now." Craig James,
Under such economic pressure, Prime Minister Kevin Rudd plans to introduce a cap-and-trade system for Australia in 2010, although he refused to say whether it would cover petrol.
Rudd also called the world's largest economies to apply a blowtorch to OPEC to increase production after the biggest one-day jump in crude oil prices reignited fears for the world economy.
Australian Treasurer Wayne Swan will also urge the world's richest nations this week to respond to soaring oil prices by taking their own direct action to help increase oil production.
The Treasurer will argue that the world's largest oil-consuming nations need to find innovative ways to help oil producers pump and refine larger volumes.
Source: Xinhua
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