Does ‘Peak Oil’ Cause Oil Prices or Do Oil Prices Cause ‘Peak Oil’?
‘Peak oil’ is meant to drive a secular increase in oil prices. But what if the cyclical behaviour of oil prices actually drove belief in peak oil? Matthew Kahn notes that traffic at the peak oil blog The Oil Drum is closely correlated with oil prices. The direction of causality is fairly unambiguous:
I don’t believe that the Oil Drum blog causes gas price dynamics. The causality runs from oil price dynamics causing interest or declines in interest in the Oil Drum blog.
posted on 10 January 2009 by skirchner
in Economics, Oil
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Comments
Similarly, I dare say interest in libertarianism and free market fundamentalism has collapsed in recent months.
What if the cyclical behaviour of the economy actually drove belief in laissez-faire economics?
Lets face it, there’s only one group with more egg on their faces at the moment than peak oilers, and that’s libertarians.
Posted by .(JavaScript must be enabled to view this email address) on 01/12 at 08:46 AM
David, why should libretarians have egg on their faces? We argue against government intervention in markets and we see government induced failure for exactly the reasons we always suggest.
Posted by .(JavaScript must be enabled to view this email address) on 01/13 at 08:21 AM
Of course, I forget.
Here in the real world we all accept that the GFC was primarily caused by the excesses of the free market, but in the parallel universe inhabited by libertarians it was “government induced failure”.
Did the government force *all* the mortgage brokers to sell loans to people who couldn’t afford them?
Did the government give mortgage brokers the big commissions for selling loans and absolve them of all responsibility?
Did the government package up the dodgy debt, slap a triple-A rating on it, and sell it to unsuspecting investors?
I am more than willing to accept the government has some responsibility for this mess, but can a libertarian accept that “consenting adults” operating in an unfettered market can make catastrophic mistakes?
Posted by .(JavaScript must be enabled to view this email address) on 01/14 at 07:33 PM
If one wants an indication of how well heavily regulated financial markets “work”, I suggest you look at the economic history of Japan over the last 15+ years. You might also look at how badly Europe seems to be coping with the economic shocks running through the global economy.
In the US, the taxpayer is picking up an enormous tab for the second time in 20 years because Congress keeps thinking that bankers are too risk averse in lending to low income (and therefore higher risk) home-buyers.
Consider also the “sub-prime” mortgages were buying into housing bubbles that only occurred in jurisdictions where officials have discretionary control over land use, thus creating “one way” bets in such markets due to said officials restricting the supply of housing. In jurisdictions where increased supply could be matched by increased demand because landowners could just build houses if and when they chose to (e.g. Texas, Germany), there were no bubbles.
If individuals can make catastrophic mistakes, officials given coercive discretionary power can make even worse ones.
There is certainly an argument about levels of prudential regulation in financial markets (clearly Australia did it better than the US). But to think that the current problems are simply a result of “unregulated” markets is to proclaim one’s ignorance.
Posted by Lorenzo on 01/15 at 02:05 PM