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Oil price increases to collapse the US economy?

I am intrigued by the WSJ’s concern that rising oil prices will destroy the US economy. Goodness gracious oil prices there are approaching $3-74 US per gallon. That’s about 98.8 US cents per litre or 40 per cent less than Australian prices. Of course these prices are, in turn, a dimension less than European prices. […]

Oil spills in Gulf

I posted on the Gulf oil spill a while back and a discussant argued I was being alarmist. The NYT thinks he is right. It is bad but there seem to be worse environmental problems. 74% of the oil released was captured which reduces the scale of the problem and “much of the rest is […]

Pelicans & petroleum

Todd Litman has some rough figures on the estimated cost of the Deep Water Horizon oil spill based on a short paper by Mark Cohen. This is ‘order of magnitude’ stuff. Litman claims estimated cleanup and compensation costs from $50b to a whopping $500b although I couldn’t see any rationale at all for the estimates […]

Oil prices dip

I forecast in April this year – in the face of hysteria about $200/barrell oil prices – that the price of oil would approach $75US/barrell within 18 months and would settle around there. After I made my prediction it increased to a peak of $145-29US. Today- about 5 months later –  it touched $91-23US.  Indeed we […]

Oil subsidies in emerging countries

A standard economic proposition is that poorer people generally have more price elastic demands for many goods.  When a good’s price rises it is those with constrained purchasing power who cut back their consumption most. Why then have oil demands not fallen in oil importing emerging and middle income countries when we know demands have […]

Oil prices will fall substantially over the next 18 months

I have emphasised before that the effects of increased fuel prices will eventually come to reduce fuel demands and create incentives for new sources of supply – these reflect supply elasticity effects and cross price elasticity effects. In the US – which purchases one third of the world’s petroleum – this seems to have already […]

Oil prices again

I have posted several times on the future of oil prices. One notion is that the US recession might put a dent in them and that longer-term the price of oil will ease. This article in The Times suggests that is not true. A US recession might cause a temporary brief fall but – through […]