Oil-driven inflation
A term that emerged around 2000 to describe the fact that global prices rise in (almost) all sectors of an economy when the price of oil increases. This is because oil is processed in many industries, even in the metal industry (for example, in the production of aluminum). In addition, a variety of substitution effects occur. For example, the price of natural rubber is rising because it is a substitute for petroleum-based synthetic rubber. Even the world market price of uranium is dependent on the price of petroleum, as electricity generated by nuclear plants partly replaces the more expensive electricity from oil-fired plants. – The demand for petroleum is increasing over time, especially in developing and newly industrializing countries, where – the emerging industry consumes petroleum, – (local) power plants are being built that generate electricity from petroleum (fuelbased electricity), – in agriculture and forestry, the previously predominant manual labor is gradually being replaced by machines, – in these countries, a steadily denser network of transport routes is being built, which increases the demand for vehicles of all kinds (airplanes, railroads, ships, trucks (CH: Camions), omnibuses (CH: Autocars, often just Cars for short), passenger cars). – In industrialized countries, a sharp increase in oil prices leads to a (relative) decrease in demand; mainly because substitutes (such as nuclear energy, biogas, wind power, solar panels) and various energy-saving technologies (thermal insulation, engines with lower fuel consumption) are now being lured out. – See biofuels, crack spread, pressure, disinflationary, energy-inflation nexus, petroleum-food nexus, financialization, inflation, global, inflation compensation, purchasing power drain, climate-
Inflation, carbon dioxide inflation, wage, indexed, wage-price spiral, oil price, oil price shocks, petrodollar, protein inflation, commodity prices, shocks, structural, electricity price, second-round effects. – Cf. ECB Monthly Bulletin of September 2008, pp. 19 ff. (fluctuations in the price of oil; role of index funds and speculators; overviews), Deutsche Bundesbank Monthly Bulletin of June 2009, pp. 40 f. (model of the effects of an energy price quoque on supply), ECB Monthly Bulletin of February 2011, pp. 95 ff. (essay with basic explanations and more recent findings; overviews), ECB Monthly Bulletin of January 2012, pp. 48 ff. (the price of oil has risen by just over five percent annually since 1999, thereby driving up the HICP), Deutsche Bundesbank Monthly Bulletin of June 2012, pp. 29 ff (relationship of the oil price to the macroeconomic cycle; many detailed overviews; references), ECB Monthly Bulletin of January 2013, p. 45 ff (burden of oil imports in the euro area, broken down by country), ECB Monthly Bulletin of May 2013, p. 83 ff (basic principles on the reliability of oil price forecasts; overviews; references), ECB Monthly Bulletin of October 2013, p. 70 f. (fiscal aspects of consumer fuel prices; overview).
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