As stated, global economic performance is largely determined by oil prices. It is not surprising that oil price surges affect various economies differently. Escalating oil prices lead to a general redistribution of income in that it is transferred from importing oil countries to exporting oil nations (Birol, 2004, 3). It is important to note, however, that although economic growth in importing oil countries during oil price hikes takes place, it has historically 'been less than the loss of economic growth in importing countries' (Birol, 2004, p.4). In other words, during oil price hikes, global net growth has always been

While the first two oil shocks created acute and persistent economic effects, the third and fourth oil shocks produced milder consequences. Two reasons for this change were more efficient oil use by developed countries and a reduction of their oil dependency. In fact, 'developed countries [currently] use half as much oil per real dollar of GDP as in the mid-1970s' (The Economist, 2005, p. 56). What's more, importing oil countries now possess substantial reserves in order to cushion themselves from volatile oil markets. Another variable during this period was a lower level of existing inflation than what was present during the first oil shocks. As a result of these factors, there was a slighter setback in output for these countries during the second wave of oil price spikes. Hence, the 1990 and 2000 oil shocks led to a mild global recession, the former with a -.5% of GNP of OECD (OECD Economic Outlook, 1990, p.1). While importing oil countries' growth was receding during this period, 'OPEC net oil export revenues (in constant $2005) were $1.7 trillion' (EIA, 2005, p. 7). Despite the softer global effects during this era, incidents of climbing oil prices are never inconsequential and may wreak economic havoc at any given moment. In fact, Roubini & Setser (2004) claim 'oil shocks have caused and/or contributed to each one of the...global recessions of the last thirty years' (p.1).

While importing oil countries typically undergo declining economic growth during oil price hikes, exporting oil countries generally experience robust economic growth. 'For net oil-exporting countries, a price increase directly increases real national income through higher expo

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