Higher gas prices could cause wider economic slowdown, economist says
Financial Post, Canada
Gasoline prices, already near record highs of $1.40 per litre this week, could rise further if Middle East tensions escalate, further dampening the economic outlook.
“Especially if the situation in the Middle East were to worsen, we could see $1.60 per litre,” said Sal Guatieri, vice-president and senior economist at Bank of Montreal. “Under that scenario our economy would slow meaningfully and our unemployment rate would go up.”
Oil prices are expected to remain relatively steady at about US$100 per barrel for the next year, which Mr. Guatieri said would either stabilize gas prices or even cause them to decline a little. However, he cautioned there was a “not insignificant” risk of the cost jumping another 25% (a 30% cumulative increase from last year) if tensions .....
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