Oil and the Economy
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Newsweek and “Cheap oil forever” | Energy Bulletin - Mozilla Fir Newsweek’s cover declares that we shall have ”Cheap Oil Forever”. Furthermore, on their hompage, www.newsweek.com they promise that we shall be told ”The truth about oil” and the person who will tell us is Ruchir Sharma, Head of Emerging Markets at Morgan Stanley Investment Management. Of course, I want to know who this oracle is and, with the help of Google, I discover Ruchr Sharma as a smiling young man in the prime of his life. With great interest I examine the article "If It’s in the Ground, It Can Only Go Down", the article that will show me the truth that my research group strives daily to find, that truth that the entire world seeks.
« Causes of the Oil Shock of 2007-08 | Main | GDP Snapshot: First Read on 2009Q1 » April 02, 2009 Consequences of the Oil Shock of 2007-08 In a follow-up on my earlier post, I'd now like to discuss the second part of my paper, Causes and Consequences of the Oil Shock of 2007-08, which I presented today at a conference at the Brookings Institution. Here I'll review the role that the oil price shock may have played in causing the economic recession that began in 2007:Q4. My paper uses a number of different models that had been fit to earlier historical episodes to see what they imply about the contribution that the oil shock of 2007-08 might have made to real GDP growth over the last year. Consequences of the Oil Shock of 2007-08
Oil shocks and recessions - Mozilla Firefox Here I provide some more background on the relation between oil price increases and economic recessions. When I first began working on my Ph.D. dissertation in 1980, I was intrigued by the fact that the oil embargo of 1973-74 and the collapse in Iranian oil production after the revolution in 1978 were both followed by global recessions. But when I called attention to the fact there had been a sharp increase in the price of oil prior to 6 of the 7 postwar U.S. recessions up to that point, the general response was one of skepticism. By the time I was presenting evidence of this relation at various seminars in 1981-82, the Iran-Iraq War had produced yet another shock to world oil markets and the NBER declared that the U.S. experienced a new recession immediately on the heels of the previous downturn, meaning that the evidence had now become that 7 out of 8 recessions had followed oil price increases.
At the end of 2007, both gasoline and crude oil prices (adjusted for inflation) were at levels last seen in 1981 and they continued to climb throughout much of 2008. While Europe has been cushioned in part from these developments, as the dollar depreciated against the euro, the fundamental forces that drove up US gasoline prices have done the same in Europe. With retail gasoline prices in the US persistently above $4 per gallon, the determinants of gasoline prices is no longer an esoteric topic best left to industry insiders. The debate has moved into the mainstream. Why gasoline prices rose so much in the US | vox - Research-base
The oil shock and recession of 2008: Part 1 - Mozil « Aggregate Demand and Finance and the Collapse in Trade | Main | "Trade finance is collapsing" » December 31, 2008 The oil shock and recession of 2008: Part 1 This is the first in what I'm planning will be a series of posts discussing the contribution that the energy price spike of 2008 made to our present economic difficulties.
« "Trade finance is collapsing" | Main | Forecasted GDP in the New Year » January 02, 2009 The oil shock and recession of 2008: Part 2 In my previous post, I presented evidence that the oil price increase over 2007:H2-2008:H1 made a significant contribution to the slowdown in consumption spending in general and decline in spending on domestic automobiles in particular. Here I discuss why this should be regarded as a key development that turned the slowdown in growth into a recession. One way to put this in perspective is to compare what happened in 2007-2008 with what we saw in 1990-91. The oil shock and recession of 2008: Part 2
IEA says oil capacity crunch looms - Upstreamonline - Mozilla Fi
« Rising world oil demand and the U.S. economy | Main | House Prices Continue to Slide » 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. Link to JEC video - Mozilla Firefox