Oil prices hovering at a historically high level are threatening to destabilize the world economy. Domestically they could exert a cooling effect on the economy just as it appears to be emerging from a long period of deflation, thus undermining the foundation for economic recovery. The public is now feeling the effects of high oil prices in the form of higher prices for gasoline and other oil products, and other goods and services.
At their recent meeting in Washington D.C., finance ministers and central bankers from the United States, Japan, Britain, Canada, France, Germany and Italy said in a joint statement that a strong global economic expansion is continuing into the fourth year and that the outlook remains favorable.
At the same time, the Group of Seven finance ministers and central bankers warned that "risks remain from oil market developments, global imbalances and growing protectionism." The G7 meeting took place as oil prices surpassed $75 a barrel for the first time in the New York market.