November 30, 2013
Presidents and the economy
An interesting new research paper by Princeton Professors Alan Blinder and Mark Watson examines differences in performance of the economy under Democratic versus Republican presidents. The paper begins:
The superiority of economic performance under Democrats rather than Republicans is nearly ubiquitous; it holds almost regardless of how you define success. By many measures, the performance gap is startlingly large--so large, in fact, that it strains credulity, given how little influence over the economy most economists (or the Constitution, for that matter) assign to the President of the United States.
November 17, 2013
Lower gasoline prices
"U.S. gasoline prices have fallen to their lowest level in nearly 33 months amid a boom in domestic oil drilling", the Wall Street Journal declared last week. That's a true statement, but there's more to the story.
November 04, 2013
Great Expectations, Deferred
Still waiting for large, economy-wide job increases from the "shale revolution"
October 06, 2013
Making money from the Eagle Ford Shale
Newly exploited tight oil formations account for more than 100% of the increase in U.S. field production of crude oil since 2005. But that doesn't mean it's easy to make money getting oil out of the ground this way.
September 15, 2013
The peak in world oil production is yet to come
World oil production stagnated between 2005 and 2007, which given rapid growth in demand from emerging economies sent oil prices shooting up. Some observers suggested that production might never rise much above the levels seen in 2005. Among those who raised this possibility, two of the more thoughtful have changed their mind. Euan Mearns last month summarized what he saw as three (or four) nails in the coffin of peak oil. And Stuart Staniford, an early editor and contributor for the Oil Drum, declared a few weeks ago that the data have spoken.
September 08, 2013
Syria and the world oil market
September 01, 2013
Coping with high oil prices
We've been seeing oil over $100 a barrel and gasoline above $3.40 a gallon for much of the last 3 years. Those prices would have shocked many Americans a few years ago, but have now become the new normal. What has changed and what hasn't as a result?
August 25, 2013
The geography of success
Weak U.S. economic growth continues to be discouraging. But it's worth taking a look at a few places where things going well for America.
July 25, 2013
Worries about China
Paul Krugman is among those starting to be concerned about an economic downturn in China. Here are my thoughts on this issue.
July 21, 2013
Brent-WTI spread disappears-- for now
On Friday the benchmark crude oil traded in the central United States (West Texas Intermediate) sold for the same price as the benchmark European crude (Brent). That's the first time that's happened in almost three years. But I don't expect the situation to persist.
April 03, 2013
The death of peak oil
Those behind the theory appear to have been dead wrong, at least in terms of when the peak would hit, having not anticipated the rapid shift in technology that led to exploding oil and natural gas production in new plays and areas long since dismissed as dried up.
These comments inspired me to revisit some of the predictions made in 2005 that received a lot of attention at the time, and take a look at what's actually happened since then.
March 24, 2013
Declining U.S. carbon dioxide emissions
Emissions of carbon dioxide from fossil fuel consumption in the United States have fallen remarkably since 2008, with recent levels the lowest since 1995. Here I comment on some of the factors behind this.
February 17, 2013
Planned crude oil pipelines
The EIA last week released a nice summary of planned additional U.S. pipeline capacity.
February 13, 2013
Prices of gasoline and crude oil
Here I comment on some recent developments affecting the prices of WTI, Brent, and gasoline.
February 10, 2013
Dude, where's my cheap gas?
Those who have been told that oil production is booming may be wondering why the prices of oil and gasoline are climbing again.
January 23, 2013
Links for 2013-01-23
Quick links to a few items I found of interest.
December 18, 2012
Future production from U.S. shale or tight oil
I attended the American Geophysical Union meeting in San Francisco two weeks ago at which I heard a very interesting presentation by David Hughes of the Post Carbon Institute. He is more pessimistic about future production potential from U.S. shale gas and tight oil formations than some other analysts. Here I report some of the data on tight oil production that led to his conclusion.
December 05, 2012
Will U.S. oil consumption continue to decline?
A lot of attention has been given to the optimistic assessments of future U.S. and Iraqi oil production in the IEA's World Energy Outlook 2012. However, perhaps even more dramatic is the report's prediction of a significant long-term decline in petroleum consumption from the OECD countries. For example, the report predicts about a 1 mb/d drop in U.S. oil consumption by 2020 and a 5 mb/d drop by 2035 relative to current levels. I was curious to examine some of the fundamentals behind petroleum consumption to assess the plausibility of the IEA projections.
November 28, 2012
I offer some observations on exhaustible resources and economic growth in the latest issue of the UCSD Economics Newsletter.
November 13, 2012
2012 World Energy Outlook from the International Energy Agency
The United States is projected to become the largest global oil producer before 2020, exceeding Saudi Arabia until the mid-2020s. At the same time, new fuel-efficiency measures in transport begin to curb US oil demand. The result is a continued fall in US oil imports, to the extent that North America becomes a net oil exporter around 2030.
October 21, 2012
Reducing oil imports
On Wednesday I noted that encouraging more U.S. oil production was unlikely to result in a significant drop in U.S. retail gasoline prices. Nevertheless, I believe that there would be some important economic benefits from lowering the U.S. oil import bill, as I discuss here.
October 17, 2012
Presidential decisions and the price of gasoline
Here I offer a few reactions to some of the comments that President Barack Obama and Governor Mitt Romney made about energy policy in their debate last night.
October 14, 2012
Update on Iran sanctions
The boycott of Iran has been more successful than I had anticipated, with Iranian oil production and exports down significantly from a year ago.
October 11, 2012
Governor Brown solves California's gas price problem
Though the record gasoline prices paid by Californians last week received national attention, it was from the beginning strictly a California problem.
October 07, 2012
California gas price spike
Californians who bought gasoline on Friday experienced an unpleasant shock.
October 03, 2012
Natural gas for transportation
As President Obama and Governor Romney prepare for the first presidential debate this evening, I thought I would offer my vision of where our nation's leaders should try to take the country.
September 23, 2012
Fat fingers and the price of oil
Can the wild swings in the price of oil over the last few weeks have anything to do with supply and demand?
September 19, 2012
Thresholds in the economic effects of oil prices
As U.S. retail gasoline prices once again near $4.00 a gallon, does this pose a threat to the economy and President Obama's prospects for re-election? My answer is no.
September 13, 2012
Imperfect Information, Biased Reasoning, and the Energy Efficiency Gap
In a new working paper, David Austin argues that for a variety of reasons, private agents do not optimize with respect to energy efficiency measures. From Addressing Market Barriers to Energy Efficiency in Buildings:
September 12, 2012
Geopolitical unrest and key oil producers
Some people observed 9/11 by lighting candles, others by killing more Americans.
August 29, 2012
Q&A on oil prices
I recently did an interview with OilPrice.com on a range of issues related to oil prices. Here are some excerpts.
August 15, 2012
Recent developments in oil markets
The price of Brent crude oil fell $35/barrel between April and June. But increases this summer have taken about $25 of that back.
July 26, 2012
Guest Contribution: Rejoinder to "Oil Price Spike Exacerbated by Wall Street Speculation?"
Today, we are fortunate to have Luciana Juvenal and Ivan Petrella, as guest contributors. In this post, they respond to Wednesday's guest contribution by Lutz Kilian, entitled Oil Price Spike Exacerbated by Wall Street Speculation?.
July 25, 2012
Guest Contribution: "Oil Price Spike Exacerbated by Wall Street Speculation?"
A recent study by Luciana Juvenal and Ivan Petrella suggests that the financialization of oil futures markets contributed significantly to the surge in oil prices after 2003. Lutz Kilian, Professor of Economics at the University of Michigan, questions their analysis and highlights that their paper actually does not shed any light on the role of Wall Street speculation.
July 18, 2012
Maugeri on peak oil
Carpe Diem, Reuters, FTalphaville, and WhaleOil are among those calling attention to a new paper by Leonardo Maugeri, senior manager for the Italian oil company Eni, and Senior Fellow at Harvard University, which concluded:
Contrary to what most people believe, oil supply capacity is growing worldwide at such an unprecedented level that it might outpace consumption. This could lead to a glut of overproduction and a steep dip in oil prices.
Based on original, bottom-up, field-by-field analysis of most oil exploration and development projects in the world, this paper suggests that an unrestricted, additional production (the level of production targeted by each single project, according to its schedule, unadjusted for risk) of more than 49 million barrels per day of oil (crude oil and natural gas liquids, or NGLs) is targeted for 2020, the equivalent of more than half the current world production capacity of 93 mbd. [After factoring in risk factors and depletion rates of currently producing oilfields], the net additional production capacity by 2020 could be 17.6 mbd, yielding a world oil production capacity of 110.6 mbd by that date.
Here I take a look at some of the details of Maugeri's analysis.
July 11, 2012
Shale oil and tight oil
Since 2005, the "total oil supply" for the United States as reported by the Energy Information Administration increased by 2.2 million barrels per day. Of this, 1.3 mb/d, or 60%, has come from natural gas liquids and biofuels, which really shouldn't be added to conventional crude production for purposes of calculating the available supply. Of the 800,000 b/d increase in actual field production of crude oil, almost all of the gain has come from shale and other tight formations that horizontal fracturing methods have only recently opened up. Here I offer some thoughts on how these new production methods change the overall outlook for U.S. oil production.
July 04, 2012
Update on U.S. gasoline prices
Two weeks ago, I commented on the tendency of U.S. retail gasoline prices to follow the price of Brent crude oil, anticipating on the basis of the price of Brent, then at $91.50, that we might expect to see average U.S. retail gasoline prices, then at $3.47, to fall an additional 35 cents/gallon. The gasoline price has since come down about 11 cents. But with Brent now surging back up near $100, this is about all we can expect.
July 01, 2012
Natural gas liquids
According to the Energy Information Administration, in March the United States produced a "total oil supply" of 10.8 million barrels per day, which was 2.1 mb/d more than in January 2005. But if you just rely on those aggregate numbers, you'll miss some very important trends.
June 27, 2012
Links for 2012-06-27
Quick links to another proposal for Europe, and estimates of U.S. consumer benefits from lower natural gas and gasoline prices.
June 24, 2012
Gasoline prices coming down
West Texas Intermediate crude oil, which had been selling for $105 a barrel at the end of March, fell to $80 a barrel last week, while Brent has come from $125 down to near $90. These price declines will translate into substantial savings for U.S. consumers in the weeks ahead.
June 13, 2012
Peak oil and price incentives
Here I describe some interesting new research on modifying Hubbert's model of peak oil to take into account the incentives for additional production that higher oil prices would be expected to bring.
June 10, 2012
Using natural gas
Here's a promising story for the U.S. economy.
June 06, 2012
Aggregate factors in the price of oil
It seems that no matter what financial series you look at, there's a similar pattern of ups and downs over the last few years. I was curious to get a quick quantitative impression of how much of a contribution aggregate factors have been making to recent movements in the price of oil.
May 27, 2012
Commodity index funds and oil prices
In my previous post I described a new research paper with University of Chicago Professor Cynthia Wu on the Effects of Index-Fund Investing on Commodity Futures Prices. Previously I discussed what we found for the prices of agricultural commodities. Here I review our findings about oil prices.
May 16, 2012
Oil and gasoline prices
Here I comment on some recent developments affecting oil and gasoline prices.
May 14, 2012
Gasoline Prices Implied by Futures
Downward, and downwardly revised.
April 25, 2012
More on speculation
In addition to my discussion last week on the role of speculation in oil markets, let me call attention to commentary from some of my academic colleagues on the same topic:
April 20, 2012
Gasoline Price Trends According to Futures
From the WSJ yesterday:
After a sizzling start to the year, gasoline futures prices are sliding, easing pressures on drivers and the U.S. economy and raising the prospect that prices at the pump could be headed lower still.
April 18, 2012
A ban on oil speculation?
Joseph P. Kennedy II, former Congressional Representative from Massachusetts, and founder, chairman, and president of Citizens Energy Corporation, has a proposal to make energy affordable for all. All we have to do, Kennedy claims, is "bar pure oil speculators entirely from commodity exchanges in the United States."
April 14, 2012
Links for 2012-04-14
Quick links to a few items I found interesting.
April 11, 2012
Managing strategic petroleum reserves
The Wall Street Journal suggests today that part of the latest surge in China's oil imports is attributable to a desire to boost the country's oil stockpiles.
April 08, 2012
Current economic conditions
Friday's jobs report was unquestionably a disappointment. But other recent U.S. economic indicators are more encouraging.
April 04, 2012
Replacing Iran's oil production
If an embargo is successful in preventing Iran from selling a significant amount of oil on the world market, what would replace it?
March 29, 2012
International Trade, an Enhanced Petroleum Transportation Network, and Gasoline Prices
Don't expect a big impact on gasoline prices from opening up an oil pipeline to the coast.
I am a little late to this debate   , but I wanted to highlight something that is clear from basic international trade theory. Opening up to international trade changes relative prices, and in fact raises some prices. If a pipeline were to be built which could transport oil currently produced in the Midwestern US to the Gulf Coast, then to the extent that oil in the Midwest is lower priced than on the coasts, then average US oil prices may actually rise with completion of the pipeline.
March 28, 2012
A rational reason for high oil prices
"There is no rational reason for high oil prices," writes Ali Naimi, Saudi Arabian Minister of Petroleum and Mineral Resources, in today's Financial Times. Well, I can think of one-- if oil prices were lower, the world would want to consume more than is currently being produced.
March 25, 2012
Disentangling the channels of the 2007-2009 recession
Harvard Professor James Stock and Princeton Professor Mark Watson presented a very interesting paper last week at the Spring 2012 Conference for the Brookings Papers on Economic Activity. Their paper studied similarities and differences between the 2007-2009 recession and other U.S. business cycles.
March 21, 2012
Why do gasoline prices differ across U.S. states?
Gasoline prices differ substantially across different parts of the United States. For example, the average price in Illinois is currently 70 cents/gallon higher than that in Wyoming, and California motorists pay 86 cents/gallon more than the folks in Wyoming. Why is that?
March 18, 2012
Strategic Petroleum Reserve to the rescue
The United States and Britain have apparently been discussing a joint release of strategic petroleum stockpiles.
March 14, 2012
Links for 2012-03-14
Quick links to a few items I found interesting.
March 06, 2012
Oil prices and the U.S. economy
Here's why I believe that the current high price of oil is not enough to derail the U.S. economic recovery.
February 29, 2012
Keystone moving forward
In a development that should not have come as a surprise to Econbrowser readers, TransCanada announced on Monday that it would proceed with the portion of the controversial Keystone pipeline expansion that would connect Cushing, Oklahoma to the Gulf of Mexico. Because this part of the project does not cross the U.S.-Canadian border, it does not require approval from the U.S. State Department.
February 26, 2012
Factors in the recent oil price increases
Crude oil prices surged last spring following disruptions in oil production from Libya, and had been drifting down during the summer and fall. But since the beginning of October, the price of West Texas Intermediate and Brent crude oil have both risen by over 30%, putting them back up near where they had been last spring. What's changed in the world since the beginning of October?
February 22, 2012
Crude oil and gasoline prices
Crude oil prices this week reached their highest level since last April. What will that mean for U.S. consumers at the gas pump?
February 19, 2012
Work-arounds for the politics of Keystone
The Keystone Gulf Coast Expansion Project is now entering its fourth year of regulatory review, and is currently on indefinite political hold. In the mean time, the market is figuring out other alternatives.
February 08, 2012
How could we boost American employment and GDP? One philosophy is to try to do more of what's already working.
January 22, 2012
Here's my suggestion for how to become rich: buy low and sell high.
January 18, 2012
Links for 2012-01-18
FT Alphaville on crude oil and the eurozone crisis.
VoxEu notes the systematic international tendency for official deficit figures to understate the magnitude of the change in public debt.
Liberty Street Economics on forecasting with internet search data.
January 15, 2012
Iranian oil embargo
January 11, 2012
Reducing Petroleum Consumption from Transportation
MIT Professor Christopher Knittel has a new paper on the potential for the United States to reduce petroleum consumption.
January 08, 2012
Current economic conditions
The latest U.S. economic indicators have taken a favorable turn.
December 28, 2011
Getting the U.S. economy growing
We can sit and wring our hands, or we can get to work.
December 25, 2011
U.S. net exports of petroleum products
One big story of 2011 was the United States switched from being a net importer to a net exporter of petroleum products. Here are the details behind that development.
December 18, 2011
Costs and benefits of the Keystone XL pipeline
November 20, 2011
Implications of the recent rise in oil prices
The price of West Texas Intermediate has risen almost $10 a barrel since the start of September, and briefly bumped back above $100 a barrel this week. Here's why I think that development may not be as worrisome for the U.S. economy as it might sound.
November 10, 2011
The U.S. State Department received the application from TransCanada for permission to build the Keystone XL Pipeline Extension over 3 years ago. Today, the White House made a firm decision not to decide just yet, with the State Department indicating that an actual decision is at least another year away.
Nice to see the President is focused like a laser on how to get Americans back to work.
November 09, 2011
Some infrastructure spending is more stimulative than others.
November 06, 2011
Autos, housing, and the business cycle
Here I offer some observations on what's been holding back the recovery.
October 23, 2011
Links for 2011-10-23
Dave Altig and Patrick Higgins at the Federal Reserve Bank of Atlanta have raised their estimate of 2011:Q3 real GDP growth from 1.4% as of the beginning of September to 3.2% currently.
Enterprise Products Partners and Enbridge Inc. announced plans to build a new pipeline from oversupplied Cushing, Oklahoma to the Gulf Coast (hat tip: Jim Brown). I reviewed the great need for such a pipeline here, and this may be one way to get one built without having to wait forever for White House approval.
Federal Reserve Bank of San Francisco President John Williams reviews lessons from the last 3 years on the effects of unconventional monetary policy.
Michael Plante and Mine Yucel at the Federal Reserve Bank of Dallas review the evidence on the role of speculation in recent oil price moves.
October 19, 2011
Peak production for U.S. oil-producing regions
I've just finished a new paper on Oil prices, exhaustible resources, and economic growth, which explores details behind the phenomenal increase in global crude oil production over the last century and a half and the implications if that trend should be reversed. Below I reproduce the paper's summary of the history of oil production from individual U.S. regions.
October 16, 2011
Could monetary policy mitigate the real effects of oil shocks?
Michael Levi (hat tip:Marginal Revolution) and Jeremy Kahn are among those who recently rediscovered some earlier research by Ben Bernanke and others that concluded that the economic downturns that followed historical oil price shocks could have been avoided if the Fed had followed a more expansionary monetary policy at the time. Here I call attention to some subsequent research that took another look at their evidence and reached a different conclusion.
September 21, 2011
Changing behavior of crude oil futures prices
I've just finished a new research paper with my former student (and now University of Chicago Professor) Cynthia Wu. In our new paper, we study how increased purchases of crude oil futures contracts by financial investors may have affected the prices on those contracts.
September 20, 2011
More thoughts on peak oil
In Saturday's Wall Street Journal, Daniel Yergin, chairman of IHS Cambridge Energy Research Associates, gave his explanation of what's wrong with peak oil. Here's why I don't find his analysis altogether convincing.
September 15, 2011
What could America be good at?
A vision of what American economic growth over the next decade could look like might also help us address our immediate economic problems.
August 28, 2011
Fundamentals, speculation, and oil prices
I was in Washington DC last week, arriving right after the earthquake and getting out of town just before Irene, to attend a conference on commodity markets at the Commodity Futures Trading Commission. Here are some of the remarks I made at the conference on the role of speculation and fundamentals in recent oil price movements.
August 23, 2011
Where can America find more income and jobs?
In January 2008, ExxonMobil and Norway's Statoil announced a promising discovery in the Julia Field in the Gulf of Mexico that may contain a billion barrels of oil. In October of that year, Exxon applied for a 5-year extension of the lease for time to develop a suitable development plan. To the company's surprise, the U.S. Department of Interior denied the request in February 2009, and has continued to turn down subsequent appeals. The company has filed a lawsuit to have the decision overturned.
August 14, 2011
Economic consequences of recent oil price changes
Earlier this year, disruptions in Libya and the resurgence of demand from the emerging economies sent oil prices up sharply, a development that many economists believe contributed to the slow growth for 2011:H1. The chaotic markets of the last few weeks saw oil prices drop back down to where they had been in December. Will that be enough to revive the struggling U.S. economy? There is some evidence suggesting that it may be too late.
August 06, 2011
Index funds and commodity prices
There has been a lot of growth over the last decade in funds that take long positions in commodity futures contracts in order to offer investors an asset that follows raw commodity prices. I've been looking into some of the data that have been used to measure the size of those positions.
July 16, 2011
Consumers get more worried
Reuters reported yesterday that the preliminary July reading for the Thomson Reuters/University of Michigan's index of consumer sentiment fell to 63.8, the lowest level in more than two years. In fact, that's about as low as this measure ever got in the recessions of 1981-82 or 1990-91, and is well below values for the recession of 2001.
July 04, 2011
Hanging in there
Higher oil prices slowed the economy in the first half of this year. But I don't expect things to get a whole lot worse.
June 29, 2011
Links for 2011-06-29
Some quick links to recent analyses of health care costs, oil price shocks, and forecasting commodity prices.
June 27, 2011
The Strategic Petroleum Reserve drawdown
The International Energy Agency announced on Thursday that its 28 member countries had agreed to release 60 million barrels from their combined strategic stockpiles. The U.S. plans to contribute half of this total, all in the form of sweet crude. Thirty million barrels represents about 10% of the U.S. strategic petroleum reserve of 293 million barrels of sweet crude oil, and about 4% of the entire 727 million barrels stockpiled in the U.S. SPR.
June 22, 2011
Making jobs priority one
It is looking unlikely that there will be more stimulus from either fiscal policy or monetary policy. Former President Bill Clinton has called for suggestions for other policy options that might be helpful. Here are a few ideas along those lines.
June 12, 2011
Chinese oil demand
Stuart Staniford notes that the number of trucks and passenger vehicles in China has been growing at about 23% each year.
June 08, 2011
The significance of OPEC announcements
The Organization of Petroleum Exporting Countries (OPEC) today announced that its members could not reach an agreement to change OPEC's production quotas. How significant is that announcement? In my opinion, not very.
June 02, 2011
A weakening economy
Incoming data over the last two weeks paint a consistent picture that the U.S. economy, which had been growing at a disappointingly slow rate, has weakened further.
May 26, 2011
Oil price manipulation
The Commodity Futures Trading Commission on Tuesday filed a civil enforcement action alleging that Nicholas Wildgoose and James Dyer, who worked as traders for Arcadia Petroleum Ltd. and its affiliates, profited by manipulating the price of oil and oil futures in early 2008. I was interested to take a look at the details of the CFTC allegations.
May 17, 2011
F for Fail
The Joint Economic Committee (JEC) Republican analysis of the impact of monetary policy on gasoline prices
I've been grading papers for the past half week, so when this popped into my mailbox yesterday morning, I was in a "grading" mood. And when I finished reading it, I determined I would give it an F. From "The Price of Oil and the Value of the Dollar: Declining Value of the U.S. Dollar Adds to the Price of Oil and Gasoline," Republican Staff Commentary (May 16, 2011):
May 15, 2011
Shale gas environmental concerns
Technological breakthroughs in methods for drilling for natural gas have opened up the possibility of vast new supplies. However, environmental concerns may turn out to be significant.
May 11, 2011
Oil prices and trading mechanics
May 08, 2011
Lower oil prices
Like a roller coaster ride, 2011 saw oil prices climb gradually, only to fall dramatically this last week. Here I offer my thoughts on some of the key contributing factors.
May 05, 2011
More on oil markets
May 04, 2011
Will high oil prices bring a new recession?
Ten of the 11 recessions in the United States since World War II have been preceded by an increase in oil prices. Does the recent surge in oil prices mean we should be looking for recession number 12?
April 23, 2011
Saudi oil production and the Libyan conflict
One of the key questions in assessing the effect of the Libyan conflict on world oil prices was the extent to which an increase in Saudi production would offset some of the lost output from Libya. Now we know the answer, and it's not reassuring.
April 19, 2011
Keystone Gulf Coast Expansion Project
If President Obama is looking for ideas that would build American infrastructure, create jobs, and reduce the budget deficit, here's an option to consider.
April 17, 2011
The puzzling differential between the price of oil in different markets seems to be persisting.
April 11, 2011
Some Thoughts on Energy Independence
The President's new initiative on increasing energy independence inspired much commentary on how much it was aspirational, rather than realistic; see for instance this extensive NYT article. In this post, I want to consider whether reduced dependence on imported energy is a worthwhile objective.
April 05, 2011
Natural gas moving forward
The Denver Post reported the opening on Saturday of stations offering compressed natural gas to drivers in Grand Junction and Rifle, towns along Interstate 70 in western Colorado, making it possible to drive a vehicle fueled by compressed natural gas from Denver to Los Angeles.
April 03, 2011
More favorable developments
March 29, 2011
Consumption spending slowing down
Guess what: rising energy prices are taking a toll on consumers.
March 23, 2011
Commodity prices in pictures
A few graphs I found interesting.
March 13, 2011
Consumers see bad news
The Reuters-Michigan survey of consumer sentiment registered a decline from 77.5 in February to a preliminary reading of 68.2 in March. That's the biggest monthly decline since the financial crisis in October 2008, and wipes out the nice gains of the last four months to put us back where we were in October 2010.
March 09, 2011
What will Saudi Arabia do?
One key question in determining the impact of instability in Libya and elsewhere on world oil markets is how much other countries can and will increase production to offset the shortfall. Here I review the critical role of Saudi Arabia in past disruptions and discuss the current situation.
February 23, 2011
Libya, oil prices, and the economic outlook
What will be the economic effects of this week's developments in Libya? We have a fair amount of historical experience from which to try to answer that question.
February 22, 2011
Lots of action in oil prices today, as the unrest has spread from Tunisia and Egypt-- which produce relatively modest amounts of crude oil-- to Libya, the country sandwiched between them, and producer of over 2% of the world's crude oil supply. Rather than try to guess where those developments are going to lead, I wanted today to try to make sense of another equally striking development in oil markets over the last 6 weeks-- the disparity between the price of oil in the Midwest United States and that elsewhere in the world.
February 09, 2011
Saudi oil reserves may be overstated by 40%
The U.S. fears that Saudi Arabia, the world's largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show.
The cables, released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom's crude oil reserves may have been overstated by as much as 300bn barrels-- nearly 40%.
Stuart also notes that in his own independent forensic analysis conducted in May 2007 (to which we called the attention of Econbrowser readers at the time), he estimated that remaining reserves in Ghawar (by far the Saudis' biggest and most important oil field) were overstated by 40%.
February 02, 2011
An improving economic outlook
Looking a little better each day.
January 29, 2011
Geopolitical unrest and world oil markets
Change is on the way in the Arab world, with Egypt the latest focal point. Here I review recent events and their implications for world oil markets.
January 18, 2011
How much are gasoline prices weighing on consumers?
On Friday Reuters reported:
Rising gasoline prices beat down U.S. consumer sentiment in early January, overshadowing an improved job outlook and passage of temporary federal tax breaks, a survey released on Friday showed. A year-end surge in gasoline prices ratcheted up consumer inflation expectations to their highest in more than two years, according to the latest data from Thomson Reuters and the University of Michigan. The surveys' preliminary January reading on the overall consumer sentiment slipped to 72.7, below 74.5 in December. It fell short of a 75.4 reading predicted by economists polled recently by Reuters.
January 15, 2011
Oil shocks and economic recessions
I've just completed a new research paper that surveys the history of the oil industry with a particular focus on the events associated with significant changes in the price of oil. Here I report the paper's summary of oil market disruptions and economic downturns since the Second World War. Every recession (with one exception) was preceded by an increase in oil prices, and every oil market disruption (with one exception) was followed by an economic recession.
January 11, 2011
The first oil shock
A research paper by Eyal Dvir of Boston College and Ken Rogoff of Harvard suggests some interesting parallels between the recent behavior of oil prices and what was observed at the very beginning of the industry. I've been doing some related research on the history of the oil industry that looks into the events behind historical oil price shocks. Here I describe the first oil shock, which occurred a century and a half ago.
January 02, 2011
December 27, 2010
Petroleum Prices and the International Dimension
Paul Krugman observes that there are many real side factors that should drive oil prices higher (in an article that cites Jim’s 2009 paper). I certainly don't have much to add in terms of thinking about oil prices and domestic macro implications, but Krugman's note did impel me to examine more closely the international aspects of the underlying demand factors.
December 08, 2010
Worrying about oil prices
The price of oil moved above $90 a barrel yesterday. Is it time to become concerned about the possible macroeconomic effects?
November 27, 2010
Peak oil in Pennsylvania
Here I pass along a few items on the early history of the oil industry that I found interesting.
November 10, 2010
I guess now we know that the Fed has the tools to prevent deflation.
November 08, 2010
Alaska and the Gulf of Mexico and Oil
Several articles caught my attention: first, the impact on the Gulf from the largest oil spill in US history, in particular on coral , and second, the attempts to get approval to drill off Alaska's coast .
July 14, 2010
Modest relief on energy costs
A reader requests that we update some of the charts we've used to track U.S. energy expenditures.
June 29, 2010
EIA: The China Syndrome
We're pleased to feature another post from Steven Kopits of Douglas-Westwood, this time on the EIA's oil demand outlook.
June 23, 2010
Links for 2010-06-23
Tim Duy thinks the fanfare about a new Chinese currency policy is overdone:
The PR overload suggests the Administration is desperately in need of a "win," no matter how trivial.... While China appears willing to adjust the parity rate, changes are likely to be more window dressing than anything else. The industrial base shifted from the US to China over the past twenty years, a transition aided by the Clinton Administration's commitment to a strong dollar, and it is not going to come rushing back for a few percentage points of currency value. The structural shift has happened, and it won't reverse easily.
When Bill McBride says he expects house prices to decline, I pay attention:
When months-of-supply is below 6 months, house prices are typically rising-- and above 6 months-of-supply, house prices are usually falling.... We are much closer to the price bottom now than in 2008, and I don't expect that severe of a price decline. But I do expect house prices to fall in the 2nd half of 2010 and into 2011-- probably another 5% to 10% for the major house price indexes (Case-Shiller and CoreLogic).
A federal judge overturned the moratorium on new deepwater offshore drilling:
"An invalid agency decision to suspend drilling of wells in depths of over 500 feet simply cannot justify the immeasurable effect on the plaintiffs, the local economy, the Gulf region, and the critical present-day aspect of the availability of domestic energy in this country," [U.S. District Judge Martin] Feldman wrote....
The temporary injunction by [Judge] Feldman appears unlikely to bring a swift resumption of deepwater drilling: Oil companies say they're reluctant to start new ventures as an uncertain appeals process unfolds.
June 16, 2010
Links for 2010-06-16
Three interesting figures on fuel consumption, job creation, and prospective interest rates.
June 14, 2010
"Sarah Palin Says "Drill, Baby, Drill" Was Right"
From CBS News, an excerpt of a Palin twitter message:
"Extreme Greenies:see now why we push'drill,baby,drill'of known reserves&promising finds in safe onshore places like ANWR? Now do you get it?"
June 09, 2010
Toxic assets and toxic oil
In some ways the Gulf of Mexico oil spill seems like a replay of the subprime lending disaster. Clever technological innovations blew up in a mess that nobody knew how to control, wreaking devastation on those innocently standing by. The actors and the scenes have changed, but you can't shake the feeling you've been through this nightmare before.
June 02, 2010
EIA: Hard Core Peak Oil Forecast
Today Econbrowser is pleased to host this guest contribution from Steven Kopits, who heads the New York office of Douglas-Westwood, energy business consultants.
May 05, 2010
How much damage does the market think the oil spill has done?
Econbrowser is pleased to host this guest contribution from UCSD Ph.D. candidate Ben Fissel, who shares a quick estimate of the economic damage from the Gulf oil spill.
May 02, 2010
Where would we be without offshore oil?
As oil continues to pour into the Gulf of Mexico, I thought it might be helpful to review how we got where we are today.
April 21, 2010
Improving the fuel efficiency of U.S. light vehicles
I recently highlighted grounds for pessimism about the ease with which the U.S. could significantly change our oil consumption habits. Here I highlight some interesting new research by U.C. Davis economics professor Christopher Knittel which offers a more optimistic assessment.
April 18, 2010
Consumers get more pessimistic
The Reuters/Michigan index of consumer sentiment tumbled four points in April. Could just be measurement noise, or could be that something new is pressing down on consumers.
April 15, 2010
More on oil prices and the economic recovery
On Saturday I commented on whether rising oil prices threaten the economic recovery. Here are some quick links to perspectives from other observers.
April 10, 2010
Do rising oil prices threaten the economic recovery?
Ten of the 11 recessions in the United States since World War II have been preceded by a sharp increase in the price of crude petroleum. Oil had been holding around $80/barrel over the last month, but traded as high as $87 last week, leading the Financial Times to ask whether oil could give the "kiss of death to recovery." Here is how I would answer that question.
March 14, 2010
The challenges ahead for world oil
University of Leeds Professor Joyce Dargay and New York University Professor Dermot Gately have a new research paper suggesting that projections from the DOE, IEA, and OPEC are underestimating the challenges ahead for meeting world oil demand.
January 13, 2010
Links for 2010-01-13
Stuart Staniford, who earlier had been persuaded that global oil production might have already peaked, now comments on the potential for increased production from Iraq to push the peak up to a decade down the road.
King Banaian on disturbing developments in Argentina and Venezuela.
Economists comment on the role of the Fed in the housing bubble. Two in particular worth emphasizing:
Marvin Goodfriend: Interest rate policy was appropriately stimulative in the 2002-3 period. But rates should have been raised less mechanically and more aggressively in 2004-5 on grounds of the usual macroeconomic conditions.... A somewhat tighter stance of interest rate policy then could have cut off the last year or so of the house price appreciation and prevented the worst part of the subsequent adjustment.
Mark Gertler: If we could go back in history and make one policy change, I'd go after sub-prime lending. Absent non-prime lending, the likely outcome of the housing correction of 2007 would have been a mild recession like 2000-2001, and not the debacle we experienced.
December 16, 2009
Links for 2009-12-16
- NY Fed economist Erkko Etula finds that he can predict oil prices using the volume of broker-dealer financial assets.
- Washington University Professor James Morley and separately Kansas City Fed economist Todd Clark haven't given up on the Great Moderation.
- My colleague Eli Berman discusses his book Radical, Religious, and Violent: The New Economics of Terrorism
- Fannie Mae and Freddie Mac may seek an increase to their $400 billion federal lifeline before the end of the year.
- Billy Hallowell puts together a blog carnival on Facing Up to the Nation's Finances.
- Berkeley Professor Petr HoYava proposes a new theory of gravity.
November 29, 2009
Cash for appliances
From the folks who brought you Cash for Clunkers.
November 15, 2009
Why are the prices of so many commodities rising in an economy that seems to remain quite weak?
November 10, 2009
Will rising oil prices derail the recovery?
October 11, 2009
Working harder and harder to keep oil production from falling
The challenges for private oil companies to increase oil production are pretty daunting.
August 10, 2009
Links for 2009-08-10
I spent the last week of July as a visiting scholar at the Federal Reserve Bank of Atlanta, home to Macroblog and a number of superb economists. Their Center for Quantitative Economic Research is now going to be reporting my GDP-Based Recession Indicator Index, as you'll see from following the link.
And I was interested in this story from the Wall Street Journal:
Houston-based Apache Corp. [APA] has agreed to provide natural gas for export to Asia through a proposed project in Canada, the latest sign that huge gas discoveries in North America are reshaping global energy markets. Kitimat LNG Inc., the Canadian company planning to build the liquefied-natural-gas export terminal in Kitimat, British Columbia, will announce Monday that Apache has become the second major North American gas producer to sign on to the project. Last month, another Houston-based gas producer, EOG Resources Inc., signed a similar deal....
"We're confident that there's going to be plenty of gas available for export for a long time," said Greg Weeres, vice president of Pacific Northern Gas Ltd., which is planning to build a pipeline to supply gas to the Kitimat facility.
August 02, 2009
Cash for clunkers
A victim of its own success?
July 19, 2009
Natural gas and oil prices
Since the start of the year, the price of crude oil has risen about 40% while the price of natural gas has fallen by about 40%. Can that divergence be maintained?
June 21, 2009
Gasoline prices and consumer sentiment
Gasoline prices (in case you've been hiding in a cave and didn't know) have been on something of a roller coaster the last few years. And it looks as though we're climbing back up another hill at the moment. How much are the recent increases in gas prices likely to weigh down American consumers?
June 14, 2009
Do you see what I see?
I'm still looking for, and still not seeing, the economic recovery that everybody is talking about.
May 31, 2009
Supply, demand, and the price of oil
Do recently rising oil prices signal a resurgence of economic growth?
May 21, 2009
Link to JEC video
The Joint Economic Committee has now posted a video of yesterday's hearing on oil and the economy. My statement starts at about 11 minutes.
May 20, 2009
Rising world oil demand and the U.S. economy
This morning, the Joint Economic Committee of the U.S. Congress took up the implications of rising world oil demand for the U.S. economy. I was invited to participate along with Daniel Yergin, Co-Founder and Chairman of Cambridge Energy Research Associates.
I have some more discussion at the Washington Post as well as the following links: