<Electric Commercial Vehicles - A Few More Thoughts The Oil Drum Drumbeat: April 12, 2009>

31 comments on Simmons: Energy Optimists vs Energy Pessimists (and Understanding EIA Data)

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Nick on April 11, 2009 - 5:51pm Permalink | Subthread | Parent | Comments top

"He is emphasizing the price of oil being the causative factor in the slump. "

Actually, he's more careful than that. His second analysis showed that high oil prices were a good predictor of economic slowdown. The only underlying explanation he suggested was the transfer of income from exporters to importers.

The first part was also interesting: it analyzed elasticity of demand, showing that there was a lag before high prices caused people to reduce consumption (more than would be explained by reduced incomes from economic slowdown).

"I have been saying that it is the interruption in growth, and the resulting credit unwind, caused by the higher oil prices (based on a squeeze in resources) "

I would suggest that the higher oil prices put greater pressure on a faulty petro-dollar recycling mechanism, causing the credit unwind, which in turn interrupted growth. Take a look at the first part of his analysis: he shows that world growth was unaffected by rising oil prices in 2006 and 2007.

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Gail the Actuary on April 11, 2009 - 8:16pm Permalink | Subthread | Parent | Comments top

Maybe world growth was unaffected, but US vehicle miles traveled was affected. This illustration is from this Brookings Institution Report.

Housing values started going down as well, especially in the most distant suburbs.

I suppose if you follow some definitions, none of this affected world growth. I am not as certain.

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Nick on April 13, 2009 - 3:12pm Permalink | Subthread | Parent | Comments top

"US vehicle miles traveled was affected"

Sure. That was partly an income effect (income going to oil sellers, some of them oil exporters), and partly conservation (reduction in low priority driving).

"Housing values started going down as well, especially in the most distant suburbs. "

Sure. That was also partly an income effect, as the poorest suburbs are the farthest out, and partly a result of the slowing housing bubble, which affected the newest construction, which was also the furthest out. Certainly it also was affected by rising commuting costs, but I don't see evidence that was the most important thing.

"I suppose if you follow some definitions, none of this affected world growth."

Of course it affected US growth. But, keep in mind that the income transfer from oil importers to exporters also shifted economic growth: the US & OECD slowed down, and Russia, FSU, & the ME grew more quickly.

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31 comments on Simmons: Energy Optimists vs Energy Pessimists (and Understanding EIA Data)

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