World can cope with $80-plus oil: Australian central bank chief

London (Platts)--25Aug2006

The world economy can cope with oil prices of more than $80/barrel
without facing serious inflationary problems, the governor of Australia's
central bank said in remarks published Friday.
In an interview with the Financial Times, Ian Macfarlane, who has headed
the Reserve Bank of Australia for ten years, said he expected inflation to
remain under control even if prices rose above recent peaks.
North Sea Brent crude futures hit an all-time high of $78.65/barrel
August 8 after BP said it was shutting down its Prudhoe Bay oil field in
Alaska because of the discovery of corrosion in the pipeline network. Prices
have since eased back by several dollars, with Brent trading at $73.68/barrel
at 0904 GMT Friday.
"There is of course a lot of anxiety about oil and a lot of attention
given to the issue worldwide," Macfarlane, who steps down from his post next
month, said. "But what I find most relevant is that we have been able to
absorb the increase in oil prices reasonably well, in a way nobody would have
predicted two or three years ago.
"We have got from $20 to $77, so if we were to go to $90, and people are
saying that then all hell is going to break loose, I really doubt it,"
Macfarlane said.

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