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London: From the poorest of Africa to the US and big business, a breakneck rally that could take oil to $200 a barrel is likely to inflict pain on everyone.
The world was remarkably resilient to a series of record prices in 2007, but a roughly 30 per cent rise since the end of last year, with predictions of more to come, is harder to absorb.
"The key issue is the rate of change. The recent exponential rise is unhealthy for everyone," a senior executive from a major oil company said. He declined to be named.
On the first trading day of 2008, oil prices hit the $100 a barrel level, which once seemed unimaginable.
The price topped $126 a barrel on Friday, making a rise to $150 probable and to $200 possible, according to Organisation of Petroleum Exporting Countries (Opec) ministers and investment bankers alike.
"If current conditions continue, reaching a period when oil is supplied at $200 a barrel is not out of reach," Iran's oil minister Oil Minister Gholamhossein Nozari said.
Investment bank Goldman Sachs said the possibility of $150-$200 a barrel over the next six-to-24 months was "increasingly likely." The bank was one of the first to point to a triple-digit oil price more than two years ago.
US prices
Oil at $200 a barrel would mean roughly $6.50 a gallon for US gasoline, according to figures from Standard Life. It makes the record $3.61 US consumers are now paying seem cheap.
Already, the US consumer has begun to retrench.
"I think we've reached the point now where we're starting to see significant responses from consumers," said Jim Hamilton, professor at the University of California in San Diego, adding oil prices were one of the factors that placed the US economy at the risk of recession.
Whatever pain the US feels, it is less than that endured in Africa, where the benefits of international aid to its non-oil producing countries have been wiped out by increased oil costs, a study by the International Energy Agency found at the end of last year.
For emerging economies, an ever bigger burden is financing subsidies their populations consider a birthright.
Major consumer countries like India and China are spending billions of dollars to keep transport costs low, while some smaller players, such as Syria, have decided to stop paying up.
The main difference from the oil crisis of the mid-1970s is that the world is less energy intensive and better at adapting, but its efforts are beginning to eat into growth as firms scramble to reduce the costs, such as wages, they can contain.
"The speed of adapting to high oil prices has been gathering pace... and will no doubt intensify if the oil price continues to rise," said Richard Batty of Standard Life.
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