16 Dec 2014

U.S. Government Policy and Oil Prices

Krugman, Oil, Shameless Self-Promotion 5 Comments

For those who like articles discussing really bad predictions confidently made by Krugman, this one’s for you. Also a nice Obama quote from 2012:

“As a country that has 2 percent of the world’s oil reserves, but uses 20 percent of the world’s oil — I’m going to repeat that — we’ve got 2 percent of the world oil reserves; we use 20 percent. What that means is, as much as we’re doing to increase oil production, we’re not going to be able to just drill our way out of the problem of high gas prices. Anybody who tells you otherwise either doesn’t know what they’re talking about or they aren’t telling you the truth.”

5 Responses to “U.S. Government Policy and Oil Prices”

    • Andrew_FL says:

      To say that the increased supply from fracking is negligible as a factor for the change in price requires some sort of assumption about the elasticity of oil demand (and supply, for that matter). Namely that both are pretty elastic, or at least sufficiently elastic that small changes in supply or demand don’t result in large changes in the price.

      All one needs to suppose, to attribute all the price decline to a small shift in supply, is a relatively inelastic demand for oil.

      Schiff may be right. I’d want to know how elastic he thinks demand for oil is, and why.

  1. Major.Freedom says:

    Something tells me that Krugman won’t care about poor predictions he’s made in anything other than what is highly politically controlled, like price levels and employment. Then he imagines himself being a prognosticator of importance, where he can stick it to his political enemies and act as apologist for mommy style state intervention.

    Wrong about the oil market? Bah. Like he’s going to gain any applause from his progressifascist readership if he were right instead.

  2. Josiah says:

    Much of being a public intellectual seems to consist in assuming that current trends will continue. Unsurprisingly, they are wrong a lot.

  3. Innocent says:

    Oil prices will come back within the next 6 – 24 months. The low cost is a blip on the radar for Saudi’s to see what they can do on the worlds geo political stage and attempt to disrupt fracking and other disruptive technologies. Oil should have gone down to around $75 – $80 a barrel. If you can purchase energy stocks do so now. Especially Large corporations that can withstand the temporary lower oil price and have additional revenue streams.

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