Two distinct patterns emerge. If this rapid rise in energy prices had not occurred, there may have been as much as 0.7 percentage points of additional GDP growth. Over the entire four-year period, a steady energy price path could have potentially boosted GDP growth by 0.2 percentage points. In interpreting these values, keep in mind that any attempt to make a judgement about what might have occurred in the past based on an hypothetical experiment, cannot fully account for the dynamic events which shape history. Nonetheless, such an experiment can help to provide insights about the likely direction and potential magnitude of impact.
Volatility matters for all consumers and producers in the economy.
Business firms, both energy and non-energy, make investment decisions based on expectations about prices. Even those firms that expect volatility may be adversely affected by simply putting off a decision until the market is more stable. Consumer purchases of housing and consumer durables such as autos and appliances are also affected by instability in energy markets. The economy would most likely perform better with stable or predictable energy prices, than when the price of energy fluctuates greatly. Similar to the U.S., all countries stand to experience higher inflation due to rising oil prices.