There’s no shortage of commentary on the fact that continuing unrest in Egypt appears to have driven up oil prices. But what is it precisely that’s sparking market concern?

Much of the market reaction may be (sort of) irrational. Big and unexpected things are happening in the Middle East, and people rightly associate the Middle East with oil. Traders didn’t have time to analyze the full consequences of Friday’s developments before placing their bets. Odds are that many bought oil as a simple and instinctinve way of protecting themselves against an uncertain situation. Read more »

I am not a huge fan of the Sputnik Moment / Win the Future / Sky Is Falling rhetoric that President Obama invoked in his State of the Union and that his team have been using to sell their clean energy strategy. But I’m also growing weary of reading contrary economic analyses that seem to believe that economic policy is all about win-wins and kumbaya. Read more »

Last night, I posted some preliminary analysis on the new Obama goal of 80% clean electricity by 2035. Like most other observers, I assumed, based on the President’s rhetoric and the language in the available White House fact sheets, that the target included renewables, nuclear, and natural gas. Read more »

[UPDATE: I've updated these numbers, based on a 50% credit for gas, here.]

President Obama announced a big new energy goal in his State of the Union address tonight: generating 80% of America’s electricity from clean sources by 2035. In the interest of helping people get a sense of what that means, here’s my quick analysis of how that compares to past climate proposals. The bottom line is that this looks more ambitious, at least for the electricity sector, than the climate bills that failed last year. Read more »

News last night that energy czar Carol Browner will be leaving the Obama administration has been roundly interpreted as the death knell for serious climate policy. Politico reports several reactions: one environmentalist argues that it’s “a big blow to the president’s image as a leader on health and the environment,” while an industry lobbyist contends that “her departure may be part of a legitimate effort to pay careful attention to addressing some of the real regulatory obstacles in the way of job creation in the United States.” Joe Romm calls it “a bombshell,” while Chris Mooney says that “there’s no surer sign that nothing major is going to happen on global warming in the next two years.” The FT writes that “green campaigners will be worried about the signal Browner’s departure sends,” though it argues that “the move may be more personal than policy-dictated,” since “Browner had felt personally bruised by Obama’s way of running the White House.” The Wall Street Journal reports that “Eliminating Ms. Browner’s position would be another signal that the White House is giving up the effort [to pass a climate bill].” Read more »

Writing in the Washington Post a couple weeks ago, Jeffrey Leonard argued that Congress should scrap all energy subsidies – and that clean energy would come out ahead. The op-ed was a shorter version of an essay in the current issue of the Washington Monthly. Here’s his bottom line: Read more »

The New York Times “Room for Debate” asked seven smart experts whether the United States can compete with China on green technology. Their responses, published yesterday, are well worth reading. I worry, though, that they reflect a peculiar, and increasingly unproductive, debate. Read more »

I spent Friday and Saturday at an excellent (largely academic) workshop on international institutions and global governance. In our discussions about why states do and don’t cooperate, I was struck by how absent states’ capacity to cooperate was from the discussion. In particular, when it comes to energy and climate, it’s one of the bigger blind spots in how both practitioners and scholars think about cooperation. Read more »

What do oil and wine have in common? A new working paper from two IMF economists, which is generating a lot of buzz, argues that they’re a lot more alike than you’d imagine. (Hat tip: Steve LeVine.) The authors look at the prices of crude oil and fine wine between 1998 and 2010 and show that they’re highly correlated. They find that that’s because they’re both driven primarily by demand – in particular, they argue that surging global economic growth over the period they’ve studied explains a huge fraction of the movement in both wine and oil prices. Supply constraints, on the other hand, seem to play at most a bit role. Read more »

Oil prices are up again today. What’s going on? A look at history gives some interesting insights.

Eyal Dvir (Boston College) and Ken Rogoff (Harvard) have a very interesting working paper that tries to explain some important features of oil prices since 1861. Jim Hamilton has a neat discussion, over at Econbrowser, of the forces behind one particularly interesting episode, which he calls  “the first oil shock.” Starting from $11.65 (in 2009 dollars) in 1861, the price of oil in the United States skyrocketed to a peak of $110.11 by 1864, before dropping back to $36.84 in 1867. The whopping 845% spike in the oil price dwarfs anything seen since. Read more »