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Reducing the Economic Impacts of Oil Supply Interruptions: An International Perspective

Henry S. Rowen, John P. Weyant

Year: 1982
Volume: Volume 3
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol3-No1-1
View Abstract

Abstract:
Several circumstances could lead to deep and extended interruptions of the world's supply of oil during the 1980s. The range of potential interruptions includes those on the scale experienced in 1973-74 and 1979-80 but is not limited to them. Much deeper and longer interruptions may occur or be threatened.



World Oil Prices and Economic Growth In the 1980s

Henry D. Jacoby and James L. Paddock

Year: 1983
Volume: Volume 4
Number: Number 2
DOI: 10.5547/ISSN0195-6574-EJ-Vol4-No2-4
View Abstract

Abstract:
The world oil market is a forecaster's nightmare: seldom have so many knowledgeable observers been so wrong so often. Prior to 1973, few foresaw the magnitude of the price jump that was possible under disrupted conditions, or predicted the years of relative stability that followed. The Iranian revolution brought a similar surprise. On the other hand, in the fall of 1980 came the Iran-Iraq war; again a major price shock seemed at hand. Experts are still arguing about why it did not occur.



Comment on "Optimal Oil Producer Behavior Considering Macrofeedbacks"

Knut Anton Mork

Year: 1983
Volume: Volume 4
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol4-No4-2
View Abstract

Abstract:
Harry Saunders's paper on the above subject in this issue of the Journal raises a very interesting point. As is well known, oil-exporting countries now hold major assets in the Western economies. Furthermore, the sensitivity of these economies to abrupt changes in oil prices seems widely accepted. It then seems reasonable to expect oil exporters' pricing decisions to be influenced by concerns about the rate of return on their assets. In particular, Saunders argues that oil exporters would want to avoid abrupt price changes because the ensuing shock effects would tend to reduce the rate of return on capital.



Energy Prices and Capital Obsolescence: Evidence from the Oil Embargo Period

Joel C. Gibbons

Year: 1984
Volume: Volume 5
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol5-No1-2
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Abstract:
The average service life of fixed assets in U.S. manufacturing industries increased gradually from 1962 to 1969. Thereafter, it fell sharply up to the mid-1970s. The most rapid change occurred in the three years following the Arab oil embargo. There is reason to believe that these events were causally related: the rapid escalation of petroleum prices caused the decline in useful lives of plant and machinery. The reasoning behind this statement and an analysis of the data on service lives of fixed assets are the topic of this paper.



The Social Cost of Imported Oil

Elena Folkerts-Landau

Year: 1984
Volume: Volume 5
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol5-No3-4
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Abstract:
Structural adjustments in the economy and an increase in uncertainty about future oil prices followed the two oil price shocks of the 1970s and suggested that continued dependence on imported oil was costly. It was argued that private decisions to consume imported oil did not appropriately take into account the country's vulnerability to oil exporters. Accordingly, a literature developed around the idea that the market price of imported oil does not reflect the full social cost.



Historical Causes of Postwar Oil Shocks and Recessions

James D. Hamilton

Year: 1985
Volume: Volume 6
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol6-No1-9
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Abstract:
Turbulent petroleum markets and poor economic performance have been making headlines for the last decade. Three major oil shocks (1973-1974, 1979, and 1980-1981) have each been followed by major recessions. While the magnitude and violence of recent oil price changes are unique in postwar experience, the phenomenon of political instability producing disruptions in petroleum supply is not. Hamilton (1983a) observed that all but one of the recessions in the United States since World War II were preceded-typically by about nine months-by a dramatic increase in the price of crude petroleum (see Figure 1).



Improving Long-Term Investment Decisions under Uncertainty: Applications for the Swedish Energy Sector

Per Anders Bergendahl, Lars Brigelius, and Peter Rosen

Year: 1988
Volume: Volume 9
Number: Number 2
DOI: 10.5547/ISSN0195-6574-EJ-Vol9-No2-5
View Abstract

Abstract:
The oil price shocks in the 1970s illuminated the vulnerability of modern economies when all planning assumes everything to be going on just as usual. How is it then possible to insure against events such as oil price shocks? What will it cost and what will be the return? These are the central issues in this paper.



Are There Useful Lessons from the 1990-91Oil Price Shock?

John A. Tatom

Year: 1993
Volume: Volume14
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol14-No4-9
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Abstract:
Following Iraqs invasion of Kuwait, oil prices temporarily doubled. This paper examines the hypothesis that the U.S. economy had changed following previous oil price shocks, so that the 1990 oil price rise (and its subsequent decline) had smaller effects than previously. It also examines a related hypothesis that such a transitory oil price hike would have little or no macroeconomic effect. It surveys and rejects arguments for a reduced impact of oil price shocks and for hysteresis. The article argues that recent experience was comparable in magnitude to earlier shocks and that there were comparable macroeconomic developments and changes in the composition of output. The paper concludes with a test of the effect of energy prices on the misery index and shows that recent changes in misery are consistent with previous experience.



Oil Prices and Economic Activity: Is the Relationship Symmetric?

Javier F. Mory

Year: 1993
Volume: Volume14
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol14-No4-10
View Abstract

Abstract:
This paper presents some evidence of an asymmetric effect of oil price spikes upon the U.S. economy. It appears that price increases may be associated with reductions in economic activities, while price decreases do not display a distinct relationship with the economy.Possible explanations for these results are offered.



Oil Industry Structure and Evolving Markets

Joe Roeber

Year: 1994
Volume: Volume 15
Number: Special Issue
DOI: 10.5547/ISSN0195-6574-EJ-Vol15-NoSI-14
View Abstract

Abstract:
Of all the changes in the oil industry over the past 20 years, the most radical have taken place in the market, and in the formation of prices. These are both a response to and a cause of changes in industry structure. From plannable supplies at relatively stable prices, companies have had to learn to handle short term supplies in condition of extreme volatility. Management of the resulting price risk has become a central role of the companies' supply departments, and the use of paper markets (forward, futures and derivatives) has become an integral part of price formation. It is not impossible that the changes would be reversed, if the conditions that brought them into being-surplus production and de-integrated supply structures-were reversed in conditions of scarcity, but it is highly unlikely. Far more likely, is that risk management and the use of paper markets will increase in importance.




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