Economic analysis of the US unconventional oil and gas revolution

Mathilde Mathieu, Thomas Spencer, Oliver Sartor 22 March 2014

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The recent rapid growth in the production of unconventional oil and gas (shale gas and tight oil) in the US has led to a significant decrease of natural gas prices as well as reduced oil imports. This has raised questions about the impacts of the unconventional oil and gas revolution on the US macroeconomy, industrial competitiveness, and energy sector. It has also raised questions about its implications for the EU (e.g. Beffa and Cromme 2013).

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Topics:  Energy Environment

Tags:  energy, US, environment, oil, gas, shale gas, fracking, tight oil, energy independence

Do food prices respond to oil-price shocks?

Christiane Baumeister, Lutz Kilian 30 November 2013

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Increases in agricultural commodity prices and food prices in recent years have raised concerns among policymakers about a global food shortage. For example, the director of the International Food Policy Research Institute testified in 2008 that rising prices for agricultural crops were causing food riots in many developing countries, and that, according to the Food and Agriculture Organization of the United Nations, 37 countries were facing food crises (Rosegrant 2008).

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Topics:  Global economy

Tags:  Commodity prices, Poverty, oil, food, biofuel, ethanol

Is the Phillips curve alive and well after all? Inflation expectations and the missing disinflation

Olivier Coibion, Yuriy Gorodnichenko 15 November 2013

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“Prior to the recent deep worldwide recession, macroeconomists of all schools took a negative relation between slack and declining inflation as an axiom. Few seem to have awakened to the recent experience as a contradiction to the axiom.” (Bob Hall, 2013.)

“The surprise [about inflation] is that it’s fallen so little, given the depth and duration of the recent downturn. Based on the experience of past severe recessions, I would have expected inflation to fall by twice as much as it has.” (John Williams, 2010.)

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Topics:  Global crisis Monetary policy

Tags:  inflation, Phillips curve, expectations, oil, global crisis, disinflation, Great Recession

Asymmetric oil: Fuel for conflict

Francesco Caselli, Massimo Morelli, Dominic Rohner 19 July 2013

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"These acts are tailored in a very systematic way by the Chinese side with the aim to turn undisputed areas into disputed areas".

Vietnamese spokeswoman Nguyen Phuong Nga, following the 9 June 2011 incident where a Chinese fishing boat rammed the survey cables of the PetroVietnam ship.

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Topics:  Energy Politics and economics

Tags:  oil, Conflict, wars

Diversifying Russia

Simon Commander, Alexander Plekhanov 29 January 2013

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Russia aims to diversify its economy, thereby moving away from its dependence on oil and gas. Despite much political rhetoric, our research (European Bank for Reconstruction and Development 2012) indicates that, to date, relatively little has been achieved. Oil and gas still account for nearly 70% of total merchandise exports and around a half of the federal budget. Figure 1 shows the increasing share of minerals in total exports when measured in constant prices.

Figure 1. Russia: Structure of exports in real terms (at constant prices)

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Topics:  Development

Tags:  Russia, education, skills, oil, gas, economic diversification

Financialisation in oil markets: Lessons for policy

Bassam Fattouh, Lavan Mahadeva 21 December 2012

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In the last decade, purely financial players with no interest in the physical commodity, such as hedge funds, pension funds, insurance companies and retail investors, have become more prominent in oil futures and derivatives markets. In parallel, there has been an explosion in the variety of instruments that permit speculation in oil, such as futures, options, index funds, and exchange-traded funds. This massive expansion of the financial layer of oil has been called the financialisation of the oil markets. Has this affected the price of oil? And does it matter?

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Topics:  Energy Financial markets

Tags:  oil, oil price, financialisation

Managing and harnessing volatile oil windfalls: Three funds, three countries and three stories

Ton van den Bremer, Rick van der Ploeg 14 December 2012

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Many countries experience substantial revenue windfalls from natural resources. The consensus is that these should not be consumed immediately but put in a fund, typically a sovereign wealth fund, in order to smooth the benefits across generations and deal with the otherwise adverse effects of Dutch disease and the resource curse. But should they? And if so, why? In a recent column, Cherif and Hasanov (2012) addressed the oil exporters’ dilemma, i.e. how much of the windfall to save and how much to invest.

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Topics:  Energy Macroeconomic policy

Tags:  oil, resource curse, oil funds

Oil price risk, expropriation and bilateral investment treaties

Johannes Stroebel, Arthur van Benthem 21 October 2012

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The sharp increase in the oil price between 2003 and 2008 brought back a phenomenon commonly observed in the 1960s and 1970s. Countries are expropriating assets of independent oil companies – directly with large unexpected windfall taxes. Countries with recent expropriations include Bolivia, Ecuador, Algeria, Russia, China and Venezuela. The subsequent collapse of the oil price highlighted how exposed many countries are to oil-price fluctuations, and many government budgets needed to be slashed in response to the price decline.

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Topics:  Energy Politics and economics

Tags:  oil, expropriation, bilateral investment treaties

Do oil prices help forecast US real GDP? The role of non-linearities and asymmetries

Lutz Kilian 29 June 2012

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There has been much interest since the 1970s in the question of whether lagged oil price changes help forecast US real GDP growth (Hamilton 2009). This question has taken on new urgency following the large fluctuations in the price of oil in recent years. There is interest not only in the question of possible asymmetries depending on whether the price of oil goes up or down, but also in the idea that increases in the price of oil beyond certain time-varying thresholds may trigger recessions.

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Topics:  Energy Macroeconomic policy

Tags:  US, energy prices, oil prices, oil, real GDP

Greasing the wheel: Oil’s role in the global crisis

Lucas Chancel, Thomas Spencer 16 May 2012

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Between January 2002 and August 2008, the nominal oil price rose from $19.7 to $133.4 a barrel. This led to a large increase in oil revenues for oil exporters and a deterioration of the current account for oil importers (Figure 1). Between 2002 and 2006, net capital outflows from oil exporters grew by 348%, becoming the largest global source of net capital outflows in 2006 (McKinsey 2007).

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Topics:  Energy

Tags:  oil, global crisis

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