Fracking has driven an oil and natural gas boom in the US over the past decade. This column examines the impact these mining activities have had on local and regional economies. US counties enjoy significant economic benefits, including increased wages and new job creation. These effects grow as the geographic radius is extended to include neighbouring areas in the region. The results suggest that the fracking boom provided some insulation for these areas during the Great Recession, and lowered national unemployment by as much as 0.5%.
James Feyrer, Erin T. Mansur, Bruce Sacerdote, Monday, November 16, 2015 - 00:00
Sascha Bützer, Maurizio Michael Habib, Livio Stracca, Saturday, March 7, 2015 - 00:00
Lutz Kilian, Wednesday, January 14, 2015 - 00:00
Christiane Baumeister, Lutz Kilian, Wednesday, November 19, 2014 - 00:00
Mathilde Mathieu, Thomas Spencer, Oliver Sartor, Saturday, March 22, 2014 - 00:00
The US unconventional energy boom has reversed the decline of domestic production, lowered oil and gas imports, reduced gas prices, and created political space for tougher regulations on coal-fired power plants. This column argues that it is not a panacea, however. Even if current estimates prove accurate, the long-run benefits to the US economy will be relatively small. Improving energy efficiency and promoting low-carbon technologies will be just as important as before – especially for the EU, given its more limited known reserves of unconventional oil and gas.
Christiane Baumeister, Lutz Kilian, Saturday, November 30, 2013 - 00:00
Recently, there has been great concern among policymakers worldwide about rising food prices and increased food-price volatility. It is widely believed that oil and food prices have become closely linked after 2006, owing in part to a shift in US biofuel policies. This column presents evidence that challenges this conventional wisdom.
Olivier Coibion, Yuriy Gorodnichenko, Friday, November 15, 2013 - 00:00
During the Great Recession, advanced economies have not experienced the disinflation that has historically been associated with high unemployment. This column shows that using consumers’ (as opposed to forecasters’) inflation expectations restores the traditional Phillips curve relationship for recent years. Consumers’ inflation expectations are more responsive to oil prices than those of professional forecasters. The increase in oil prices between 2009 and 2012 may in fact have prevented the onset of pernicious deflationary dynamics.
Francesco Caselli, Massimo Morelli, Dominic Rohner, Friday, July 19, 2013 - 00:00
Oil has often been linked to interstate wars. This column argues that asymmetries in endowments of natural resources are important determinants of territorial conflict. When one country has oil near its border with an oil-less country, the probability of conflict is between three and four times as large as when neither country has oil. In contrast, when the oil is very far from the border, the probability of conflict is not significantly higher than between countries with no oil.
Simon Commander, Alexander Plekhanov, Tuesday, January 29, 2013 - 00:00
Russia aims to diversify its economy and reduce its dependence on natural resources. Despite laudable aims, this column argues that progress has been sluggish. Longstanding obstacles of corruption, low business-entry rates and weak competition afflict other countries that, like Russia, are in transition. Yet Russia comes pretty much bottom of the class. Crucially, the fact that economic diversification requires improvements to education and skills acquisition has been somewhat overlooked by the state. What attempts the state has made, such as supporting technology innovation, appear to have been ineffectual and, at times, counterproductive. Going forward, Russia would do well to focus on improving incentives for market-relevant research and development, complemented by private sector-led sources of finance for early-stage firms.
Bassam Fattouh, Lavan Mahadeva, Friday, December 21, 2012 - 00:00
In the last decade, 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 has been called the financialisation of the oil markets. This column examines whether this has affected the oil price and predicts powerful natural limits on the ability of financialisation shifts to raise spot prices in frictionless markets.
Ton van den Bremer, Rick van der Ploeg, Friday, December 14, 2012 - 00:00
Many countries experience substantial revenue windfalls from natural resources. The consensus is that these should not be consumed but put in a fund to smooth the benefits across generations. This column examines how policy recommendations may differ among oil-rich countries, here Norway, Ghana and Iraq. It suggests that oil exporters may need to accumulate not only an intergenerational fund but also a liquidity fund to cope with oil price volatility and a domestic investment fund to alleviate the burden of capital scarcity.
Johannes Stroebel, Arthur van Benthem, Sunday, October 21, 2012 - 00:00
The sharp increase in the oil price between 2003 and 2008 brought back the practice of expropriating assets of independent oil companies. This column suggests that bilateral investment treaties may mitigate expropriations and allow resource-rich countries to shift a larger proportion of the risk associated with variations in natural resource prices to oil companies.
Lutz Kilian, Friday, June 29, 2012 - 00:00
It has long been argued that changes in the price of oil can help forecast US real GDP growth. This column addresses the common concern among many policymakers that the feedback from oil prices to the economy may become stronger once the price of oil reaches a certain level.
Lucas Chancel, Thomas Spencer, Wednesday, May 16, 2012 - 00:00
Between January 2002 and August 2008, the nominal oil price rose from $19.7 to $133.4 a barrel. This column gathers evidence on the role of this rise in prices in the global crisis. It suggests that oil prices had a direct impact on household expenditure on gasoline and increased mortgage delinquency rates. It adds that it also had many indirect impacts, notably though interest rate increases due to monetary policy.
Michele Ruta, Anthony Venables, Saturday, April 21, 2012 - 00:00
Around one fifth of global merchandise trade is in natural resources. Yet national policies manipulate trade flows and prices, and the problem is exacerbated by market failure in long-run extraction contracts. This column argues these problems could be addressed by extending the role of the WTO in the enforcement of resource-extraction agreements.
Lutz Kilian, Saturday, April 21, 2012 - 00:00
Was the surge in the oil prices between 2003 and 2008 caused by financial investors taking speculative positions in oil futures markets? Many pundits and policymakers seem to think so, but this column says this view goes against the extensive body of evidence.
Marco Annunziata, Sunday, March 18, 2012 - 00:00
Oil prices are again on the rise – will this derail the economic recovery? And what if there is an oil shock on the horizon? This column presents an overview of the oil market and its possible effects on the global economy. It argues that if there is a shock, the list of casualties will have Europe at the top with the US close behind.
Francesco Caselli, Andrea Tesei, Thursday, December 22, 2011 - 00:00
Oil and other natural resources can be both a blessing and a curse. Incomes may rise, but the politics can soon turn nasty. This column looks at a large panel of countries and finds that this isn’t always the case. Discovering natural resources has no effect on the political system – if the country is already a democracy.
Guy Michaels, Yu-Hsiang Lei, Thursday, December 1, 2011 - 00:00
Do natural resource windfalls, such as those arising from the discovery of giant oil fields, increase the risk of internal armed conflict? This column argues that giant oil field discoveries, which are largely down to chance, significantly increase the incidence of conflict. This is especially so in countries with recent histories of political violence, where locals may have little to gain from such discoveries
Tobias Rasmussen, Agustin Roitman, Thursday, August 25, 2011 - 00:00
Recent developments in oil markets and the global economy have, once again, triggered concerns about the impact of oil price shocks around the world. This column wonders whether the fuss is really necessary. It presents evidence of relatively small negative effects of oil price increases.