Oil

Spinning for Heathrow

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There is no business itch too trivial for the British Chancellor George Osborne not to want to scratch it, no matter what the other consequences. So perhaps it shouldn’t come as a surprise that the sustained lobbying by not one but two separate Heathrow expansion campaigns has got Osborne, or so it’s claimed, lobbying his Cabinet colleagues on a change of mind on Heathrow’s third runway. I’ve written here before…about the long-term trends influencing aviation in the rich world. My assessment then was that most of them pointed to a decline in demand for long-haul flight (and in Europe and the United States, probably short-haul as well). So it’s probably worth spending some time on the “studies” which support the latest political mood music emanating from Number 11.

Oil – Mar 28

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-France discussing strategic oil release with UK, U.S.
-Oil Futures Spark Debate on $100 Level
-South Sudan oil field “bombed”, Sudan says hopes to avert war
-Tanker drivers’ dispute: Acas invites oil firms and union to talks
-Report: Gulf Oil Spill Killed Life Deep Beneath Sea Level
-Shell Sued in U.K. Over ’Massive’ 2008 Nigerian Oil Spills
-World oil import bill heading for record $2 trillion

Disentangling the channels of the 2007-2009 recession

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A number of economists and commentators have mocked the idea that the "housing crash" was started by an oil price shock. Profs. Stock and Watson analyze the data and conclude that 1) it was actually a fairly typical recession, though unusually deep because of one or more very large shocks, and 2) the most likely initial cause was a significant oil price shock.

Global oil risks in the early 21st century

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Abstract: The Deepwater Horizon incident demonstrated that most of the oil left is deep offshore or in other locations difficult to reach…In this regard, the physical limitations on producing ever-increasing quantities of oil are highlighted, as well as the possibility of the peak of production occurring this decade. The economics of oil supply and demand are also briefly discussed, showing why the available supply is basically fixed in the short to medium term. Also, an alarm bell for economic recessions is raised when energy takes a disproportionate amount of total consumer expenditures. In this context, risk mitigation practices in government and business are called for.

We screwed up: A letter of apology to my granddaughter

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I wrote the following letter to my granddaughter, Madeline, who is almost four years old. Although she cannot read it today, I hope she will read it in a future that proves so much better than the one that is probable, and so terribly unfair. I’m sharing this letter with other parents and grandparents in the hope that it may move them to embrace their roles as citizens and commit to the hard work of making the planet viable, the economy equitable, and our culture democratic for the many Madelines to come.

Lack of systems thinking

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While it’s understandable to focus on a single problem, what succeeds in providing domestic energy may, for example, worsen global warming. Thus, we find triumphant articles that celebrate energy independence, as if extracting more domestic fossil fuel were an overall solution rather than, as it is, a continuation of a problem of a different kind.

Digging in the couch cushions for loose change: Or, why don’t we just create more resources?

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Let’s scrap the misleading language of “creating more resources.” When was the last time you made a fish or some oil? Instead, let’s try and get a real sense of what high oil prices are driving us to do – digging around in our couch cushions for loose change.

Why Saudi and American bluffing won’t lower oil prices (Hint: It doesn’t work when people know you’re bluffing)

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If you have the power and the desire to bring down oil prices, the best way to proceed is to start bringing them down. The easiest and fastest method would be to make more supplies available to the world market and keep adding until you reach your target price. The less you say about what you are doing, the better. When market participants are filled with uncertainty about your intentions, they have only the direction of prices to guide them. That means the speculative players can help you achieve your goals more quickly as they panic out of their positions.

This was not, of course, the path chosen by the United States, Great Britain and Saudi Arabia recently when they announced that they were contemplating intervention in the oil markets–in the form of releases from strategic petroleum reserves in the case of the United States and Britain and in the form of increased production by Saudi Arabia.