Impact of Higher Energy Prices

The WEO 2006 includes a study of the impact of higher energy prices on demand and the economy. The objective is to analyse quantitatively the consequences of higher energy prices on energy markets and the wider economy, both historically and in the future. In particular, it attempts to answer questions such as: Why have both energy demand and economic growth apparently responded so little to higher prices in recent years? To what extent do price subsidies dampen the impact of higher international energy prices on demand and accentuate the macroeconomic pain? What does recent experience tell us about prospects for energy demand and economic growth in the future? Which regions, sectors and social groups are most vulnerable to persistent higher prices? The work has global scope but will focus on developing regions, notably in developing Asia and Africa. The chapter also provides a global subsidy database. The work has been carried out in close collaboration with the IMF, the World Bank, the Asian Development Bank, the African Development Bank and the OECD.