Comments on: Economic Policy vs. the Energy Economy http://cstpr.colorado.edu/prometheus/?p=5205 Wed, 29 Jul 2009 22:36:51 -0600 http://wordpress.org/?v=2.9.1 hourly 1 By: MIKE MCHENRY http://cstpr.colorado.edu/prometheus/?p=5205&cpage=1#comment-13852 MIKE MCHENRY Mon, 11 May 2009 21:24:48 +0000 http://sciencepolicy.colorado.edu/prometheus/?p=5205#comment-13852 It was redistribution of wealth from consumer nations to producer nations. Since consumer nations are made up of mostly the G8 who buy durable goods and the like from the developing world it had a negative impact on the global economy. Exxon and the like did make enormous profits by corporate standards but they are dwarfed by the national oil companies. Hamiltons paper falls short. In the real world no refinery was on the brink of shutting down because of lack of supply. Exxon and other oil execs testified there was shortage of supply. Evidence of this can be seen in what happened to the price of gasoline in the USA as crude rose. Refinerers were unable to pass on the increases and began to lose money. Gasoline demand was nose diving long before the July peak of 150/bbl. The price of crude then declined sharply. This sharp decline in crude and preceding decline of demand of finished product undermines his inelasticity theory. If finish product had remained high $ then demand would have fell further. The early 1980's are a better case study on elasticity. It was redistribution of wealth from consumer nations to producer nations. Since consumer nations are made up of mostly the G8 who buy durable goods and the like from the developing world it had a negative impact on the global economy. Exxon and the like did make enormous profits by corporate standards but they are dwarfed by the national oil companies.

Hamiltons paper falls short. In the real world no refinery was on the brink of shutting down because of lack of supply. Exxon and other oil execs testified there was shortage of supply. Evidence of this can be seen in what happened to the price of gasoline in the USA as crude rose. Refinerers were unable to pass on the increases and began to lose money. Gasoline demand was nose diving long before the July peak of 150/bbl. The price of crude then declined sharply. This sharp decline in crude and preceding decline of demand of finished product undermines his inelasticity theory. If finish product had remained high $ then demand would have fell further. The early 1980’s are a better case study on elasticity.

]]> By: Roger Pielke, Jr. http://cstpr.colorado.edu/prometheus/?p=5205&cpage=1#comment-13843 Roger Pielke, Jr. Mon, 11 May 2009 15:36:03 +0000 http://sciencepolicy.colorado.edu/prometheus/?p=5205#comment-13843 Economist James Hamilton's perspective: http://www.brookings.edu/economics/bpea/~/media/Files/Programs/ES/BPEA/2009_spring_bpea_papers/2009_spring_bpea_hamilton.pdf Economist James Hamilton’s perspective:

http://www.brookings.edu/economics/bpea/~/media/Files/Programs/ES/BPEA/2009_spring_bpea_papers/2009_spring_bpea_hamilton.pdf

]]> By: dean http://cstpr.colorado.edu/prometheus/?p=5205&cpage=1#comment-13842 dean Mon, 11 May 2009 15:27:08 +0000 http://sciencepolicy.colorado.edu/prometheus/?p=5205#comment-13842 And what do Exxon and Saudi Arabia et al do with the money they got when oil prices were high? It doesn't go under a mattress. Some of it, not sure how much, does get recycled into the global economy. As such, the trillions that you describe as going for expensive oil do not just disappear. The stimulus was dealing with money that did disappear from economic activity because those who "make" that money (banks) weren't doing so. I'm not saying that there was no oil factor, just that calculating the difference in what was spent on it is not the same as the impact on economic activity. I think that the huge trade deficit that the US has been running for decades plays a role here as it means that whatever percentage of oil money that does get into the global economy, less of it gets into the US economy, because people elsewhere don't buy as much from us as we buy from them. Which is why I think that dealing with the structural trade deficit is important to long-term economic health. And I don't see very many politicians from either political party addressing this. And what do Exxon and Saudi Arabia et al do with the money they got when oil prices were high? It doesn’t go under a mattress. Some of it, not sure how much, does get recycled into the global economy. As such, the trillions that you describe as going for expensive oil do not just disappear.

The stimulus was dealing with money that did disappear from economic activity because those who “make” that money (banks) weren’t doing so.

I’m not saying that there was no oil factor, just that calculating the difference in what was spent on it is not the same as the impact on economic activity. I think that the huge trade deficit that the US has been running for decades plays a role here as it means that whatever percentage of oil money that does get into the global economy, less of it gets into the US economy, because people elsewhere don’t buy as much from us as we buy from them. Which is why I think that dealing with the structural trade deficit is important to long-term economic health. And I don’t see very many politicians from either political party addressing this.

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