Today’s announcements by the Department of Energy on the use of the Strategic Petroleum Reserve and by the Environmental Protection Agency on fuel standards are steps in the right direction. But we should be clear about the magnitude of the challenges ahead.
Author Archives: James_Hamilton
Katrina: Day 2
A sobering day today, as we learned that New Orleans and much of the coast had not been spared after all. The waters swept away what many generations had built, and the task of trying to put it back together seems increasingly daunting.
Others are in a better position than I to communicate progress and needs of the relief effort. For those interested in what the economic implications of all this might prove to be, I offer these thoughts.
Impact of Katrina
Hurricane Katrina could have a much bigger effect on the price of gasoline and natural gas than on the price of crude oil. Here’s why.
Supply factors in the 2005 oil price surge
World oil production increased 4.2% during 2004, leading many analysts to conclude that demand increases, not supply disruptions, were the story behind last year’s rise in oil prices. As data for 2005 become available, I’m forced to conclude that the reason that oil prices have continued to surge above their values from 2004 is not further increases in demand, but rather concerns about the ability of supply to increase significantly above the 2004 levels.
Petroleum 101
If any of you ever had thoughts of drilling to see if you could find some oil, the Oil Drum has been running an excellent series on exactly how the physical process of drilling for oil works. Here are links to what’s been discussed so far.
Recession in 2006-07?
If you just extrapolate the dynamics of past economic expansions, you’d say that a recession within the next few years is quite possible but by no means certain. The question is how much weight you want to attach to some of the other factors.
The PR of PO
Sometimes discussions on both sides of the issue of PO (peak oil) look more like a PR (public relations) campaign than an open exchange of ideas.
Murky future for Merck
So what’s the big deal? We’ll just get some other company to take its place in the Dow Jones Industrial Average.
Sweet and sour crude
Differences across grades of crude oil can tell us a lot about why oil prices have become so high.
Measuring inflation
It’s easy enough to define inflation as a decline in the purchasing power of a dollar. But the power of a dollar to purchase– exactly what? The devil is in the details.