High Oil Prices Endangers Costa Rican Economy

The goals of the Costa Rican economy for 2012 have been predicated on oil prices remaining below $100 a barrel. The recent hikes in the international oil markets could threaten Costa Rica Investing and expansion prospects. A recent study by the Central Bank of Costa Rica shows that the country has imported anywhere from 500 million to two billion barrels of oil monthly. Prices on this imported oil have varied between $80 and $120 per barrel.

Jaco Beach Costa RicaLa Nacion, a respected local newspaper, recently interviewed Carlos Arguedas, an economist at the Universidad Nacional. He pointed out that inflation could result from higher-priced oil. Inflation in Costa Rica has hovered around five percent this year. In addition, business production costs and family living costs could rise this year, leading to a decrease in economic growth. This in turn could result in a tax collection shortfall and perhaps an increase in the foreign exchange deficit.

Rodrigo Bolanos, President of the Central Bank, urged caution about being prematurely alarmed by the oil situation. He noted that oil price increases last year did not wreck the economy nor exacerbate inflation beyond the established projections. The Costa Rican Central Bank has to some extent the power to protect the economy from the effects of higher oil prices.

Of course, should Iran insist on developing a nuclear weapon, all bets are off when it comes to oil prices. Israel and the United States will never allow Iran to develop such a weapon, and any attempt to do so will plunge Iran into a self-destructive war. The long-suffering Iranian people will pay the price for allowing the lunatics running the government to propel the country into such a dangerous course of action. The US has both known and secret weapons that can destroy entire mountains and any laboratories hidden within. Should the Iranians force this war upon the West, you can be sure that oil prices will skyrocket, notwithstanding the empty rhetoric of Newt Gingrich and his cohorts. Should this occur, Costa Rica’s economy would undoubtedly suffer a setback. However, the destruction of the current Iranian government might in the long run be good for oil markets, and prices should eventually return to their pre-tension levels. In that case, Costa Rica would quickly recover and resume its bright future as one of the most attractive locations in Latin America for business and investing.