An Oil Price of $140 a Barrel Could Lead to a Recession and 'Demand Destruction'
Due to turmoil in the Middle East, the price of oil hovers at levels not seen since 2008, leading economists to imagine the worst-case scenarios for the global economy.
Oil futures settled at $105.02 Tuesday, down 42 cents from Monday, on the New York Mercantile Exchange.
$140 a barrel would have dire effects on the global economy, said Nouriel Roubini, professor of economics at New York University's Stern School of Business.
Roubini told reporters at a conference in Dubai that $140 a barrel or higher could cause advanced economies to fall into a recession.
"If you had the oil price going up to where it was in the summer of 2008, at $140 a barrel, at that point some of the advanced economies will start to double dip," Roubini said, according to Bloomberg News. "In the U.S., where growth is accelerating fast, a 15 to 20 percent increase in oil prices, there won't be double dip but growth reaching a stalled speed again."
Roubini was traveling and not available for comment to ABC News.
Markets are still jittery, traders concerned that unrest in the Middle East will disrupt the global supply of oil. After protests forced out the leaders of Tunisia and Egypt, rebels continue to fight for the third week to break Moammar Gadhafi's 41 year grip over Libya.
"My general feeling is you're probably going to constantly see some kind of negative news coming from that region which is going to keep pressure on oil to rise," said Tom di Galoma, head of fixed income rates trading at Guggenheim Securities. "This doesn't look like it's even close to being over."
Calls to President Obama to tap the nation's Strategic Petroleum Reserve continued. On Tuesday, Sen. Charles Schumer (D-N.Y.) joined the growing list of legislators asking the President to tap into the 727 million barrels of oil kept for emergencies.国道限速多少
"While I have long held, and continue to contend, that it is incumbent upon our nation to become energy independent we still require stable petroleum prices to fuel our economy," wrote Schumer in a letter to Obama. "As you are aware, the price of oil has a significant impact on our national economy, in industries ranging from aviation to agriculture. Additionally, high oil prices also affect working-class Americans who depend on a reasonable price of gas to fuel their travel to and from work."
Shelley Goldberg, director of Global Resources and Commodities Strategy at Roubini Global Economics, said it is possible that oil could reach $140 if the unrest in the Middle East further affects the supplies of OPEC and non-OPEC members.
Oil Prices: The Worst-Case Scenario
"The risk of sustained higher prices has increased," said Goldberg. "Dr. Roubini indicates that it could, but we're not saying that it will. There are a number of scenarios that could take place."
She said her firm is creating a scenario analysis of at least three situations studying the effect of oil prices on the global economy. A base case scenario is for prices to remain at the current levels of $90 to $100 a barrel. Goldberg said global markets may be sustainable at current oil prices. She added that her firm views oil as an investment worth watching.
"We like oil and favor it and think it should be in a portfolio," she said.
The second scenario is if the price of oil were to sustain at around $120 a barrel.
Goldberg said higher oil prices affect developed and developing economies in different ways. Both would experience "demand destruction," in which economies slow down due to the higher costs of oi
l, a major input. Emerging economies use crude oil mostly for industrial purposes, such as building infrastructure, said Goldberg. Developed economies, including the United States and United Kingdom, tend to experience the effects of oil prices on the retail level, like transportation.
Oil prices have affected consumers at the pump. The national average gas price is $3.52, up 14 cents from last week and 77 cents from a year ago, according to the Department of Energy's weekly figures released on Monday.
新锋范The worst-case scenario is the $140 a barrel and higher. Goldberg said the likelihood of oil reaching $140 a barrel is slim, but her firm is "not definitively outruling" that possibility.
"It would be a more detrimental scenario, not only exacerbating other emerging market nations," said Goldberg. "We would start to see indications of infrastructure damage to the extent that worldwide statistics show supply imbalance and decreases."
Consuming 19.2 Million Barrels of Oil a Day Leads to Vulnerability
Goldberg said "demand destruction" would actually take place in the U.S. at around $120 a barrel because at that level, she estimated the average price of gas would reach $4 a gallon.
But Goldberg said these were scenarios and not hard and fast rules.
Japan Quake Magnitude Upped to 9.0 as Officials Do Grim Accounting of Quake, Tsunami
Japan is taking a grim accounting of the catastrophe and the figures are daunting -- from the number of people without electricity to the number of body bags needed.
Now, there's a new figure -- 9.0, the new order of magnitude of the massive earthquake, upgraded by U.S. and Japanese scientists from their earlier estimate of 8.9 magnitude.
Four days after the quake and tsunami struck, thousands of Japanese along the coast are struggling without food, water and power as the temperatures hovered above freezing.
The starkest figure is the growing death toll which has risen to nearly 1,900. But officials fear that the number only hints at the scale of the fatalities.
In the prefecture of Miyagi, a coastal area that took the full force of the tsunami, a Japanese police official told the Associated Press that 1,000 bodies were found along shore. In Miyagi, the police chief has said 10,000 people are estimated to have died in his province alone.
Morgues are overflowing and school gyms are being used instead, lining up bodies on the floor for people to identify. The traditional method of cremation has overwhelmed the local facilities and the supply of body bags has been exhausted.
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Almost as pressing is Japan's nuclear crisis as engineers try to manage two crippled nuclear reactors and today a third reactor has lost its ability to cool, raising fears of a meltdown.
The stock market plunged over the likelihood of huge losses by Japanese industries including big names such as Toyota and Honda. Toyota and Sony have halted production. And the central bank to line up a record $183 billion in funds to help stabilize the banking system.
According to the Japanese National Police Agency, 4,993 buildings collapsed fully or partially, and 39,876 buildings are damaged, figures that are likely to increase dramatically.
Roads in the quake area are quiet as cars have been abandoned on the roadside in some of Japan's hardest-hit areas.
"People are surviving on little food and water. Things are simply not coming," Hajime Sato, a government official in Lwate prefecture, one of the three most affected areas, told the Associated Press.
Japanese Prime Minister Naoto Kan said 100,000 troops, plus 2,500 police, 1,100 emergency service teams, and more than 200 medical teams have been deployed for recovery efforts.
Ichiro Fujisaki, the nation's U.S. ambassador, said about 2.5 million households -- just over 4 percent of all households in Japan -- were without electricity Sunday, and 500,000 homes were without water.
There were worries over the welfare of the elderly population who live in some of the affected areas.
"They have some medicines for the immediate future, but in the coming weeks that's when it really could become an issue," Sam Taylor, spokesman for Doctors Without Borders, told the AP
Americans in Sendai
The U.S. Embassy said that 100,000 Americans are known to be in Japan, and 1,300 of them live in the areas most affected by the earthquake and tsunami. There are no known American casualties.
"We worked out a system where a couple of us would go search for friends or any foreigners we could in Sendai and try to help them out, and then a couple of us would go to the convenient store and try to collect food for us to survive off of for the next couple days," said Wade Ramsey, an American living and teaching in Sendai.
Ramsey, who grew up in California, knew what to do if an earthquake hit.
倒库技巧2013口诀"The moment the earthquake hit I honestly didn't know the size of it. For the past two days before it we've been having some small earthquakes. As soon as the earthquake was going for longer than 30 seconds, I knew it was a bigger earthquake," said Ramsey.
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With phone lines down and batteries drained, people are turning to the Internet to track down friends and relatives. Many in Japan have been using the internet to search for their missing loved ones.
轮毂刮花"The internet is such an amazing thing. For awhile when we didn't have electricity I was just using my phone. It was the only way I could know what was going on. I didn't even know the damage until I got home and got on the internet and did some research," Ramsey added.
Another American teacher living in Sendai, Greg Lekich, told ABC News that several of his friends w
ere killed when the roof of the gymnasium they were in collapsed. He said that he has enough water, but is in need of food supplies.
Fallout Fears: Potential Health Impact of the Japan Nuclear Crisis
As workers hurry to cool the exposed fuel rods at the Daiichi nuclear plant in Japan's quake-battered Fukushima prefecture, health officials are screening evacuees from the 12-mile danger zone surrounding the plant for radiation.
Nineteen people have shown signs of radiation exposure following the two hydrogen blasts at the plant's No.1 and No. 3 reactor buildings. And 141 more are feared to have been exposed while waiting for evacuation, including a group of 60 people removed by helicopter from a high school, according to Japan's Nuclear and Industrial Safety Agency.
Although the health impact of radiation at low doses is controversial, the National Research Council maintains that no level of above what occurs naturally is safe. Prior to the latest emergency at the Daiichi plant, radiation levels at the plant reached 3,130 microsieverts per hour -- roughly half the average annual dose in the U.S.
Jacky Williams, director of the Center for Biophysical Assessment and Risk Management Following Irradiation at the University of Rochester Medical Center, called the 12-mile evacuation radius an "extremely conservative safety zone to protect against fallout."
But even if a meltdown is avoided, the possibility of low-level radiation circulating in the air and contaminating the soil following the two steam-releasing explosions is very real, according to Dr. Janette Sherman, author and specialist in internal medicine and toxicology from Alexandria, Va.
"To assume that steam containing radioisotopes found in nuclear reactors is not going to have health effects, I think, is wishful thinking," Sherman said.
Those radioisotopes, such as iodine-131, strontium-90 and cesium-137, get taken up by the body. As they decay, they give off energy in the form of gamma rays, beta rays that penetrate deep through tissues, and alpha rays that damage DNA. Sherman likens them to harmful chemicals that settle in various tissues of the body.
"We know that radioactive iodine, which goes to the thyroid, can cause cancer and stunt children's growth," said Sherman, adding that exposure during pregnancy can damage the fetal brain. "We know strontium 90 goes to bones and teeth and is linked to leukemia and immune dysfunction. And
we know cesium goes to soft tissues, like muscle and breast tissue."
For pregnant women, the risk of birth defects and miscarriages may also rise, Sherman said.
Is the Evacuation Zone Big Enough?
The Japanese government has evacuated 184,670 residents from 10 towns in the
20-kilometer exclusion zone surrounding the plant -- a distance that Sherman said might not be sufficient.
"We know nuclear radiation [from Chernobyl] drifted as far as North America," Sherman said.
Drifting fallout could also contaminate food and water beyond the evacuation zone.
"They shouldn't eat or drink anything contaminated by cesium," Sherman said. "All food and drink have to come from outside the area."
The Japanese government has distributed 230,000 units of potassium iodide to evacuation centers bordering the danger zone as a precaution, in case radiation levels surge. Potassium iodide can bloc
k radioactive iodine from entering the thyroid -- a butterfly-shaped gland in the neck that produces hormones that regulate metabolism.
"One of the things after Chernobyl, you saw massive numbers of cancers in children. The radioactive iodine got into the grass, the cows ate the grass, it got into the milk," said Dr. Richard Besser, ABC News chief medical editor.
In addition to dozens exposed to low-dose radiation, three plant workers suffered from acute radiation sickness, the New York Times reported.
"When people receive a very high dose of radiation to the total body, like the workers did, they develop nausea, vomiting and diarrhea," said Dr. Ritsuko Komaki, professor of radiation oncology at M.D. Anderson Cancer Center in Houston.
Komaki, a native of Hiroshima, was en route to Tokyo for a scientific meeting when the earthquake hit. Her plane was rerouted from Narita airport to Nagoya.车辆防盗
"I've never seen such a disaster in my life," said Komaki, who was 2 years old when the atomic bomb hit, ultimately killing a dozen of her relatives in Hiroshima. Komaki was moved to become an oncologist because of her childhood friend Sadako Sasaki, who died from leukemia at age 11.
Radiation affects the body's cells by damaging DNA inside the nucleus. Because DNA is copied each time a cell divides, cells that divide frequently like those that line the respiratory and gastrointestinal tracts, as well as the infection-fighting white blood cells of the immune system produced in the bone marrow are most affected.
"After a few days, they may have nosebleeds and infections and become anemic," Komaki said. "They usually recover, but sometimes people die from that."