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Energy, Security, and Climate

CFR experts examine the science and foreign policy surrounding climate change, energy, and nuclear security.

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Showing posts for "Economics"

A New Study on Oil Taxes

by Michael Levi

Dan Ahn and I have a new energy brief out that takes a fresh look at oil taxes. From the introduction:

“Policymakers are confronting difficult choices [regarding tax hikes and spending cuts]…. In this context, it might be possible to reconsider oil taxes not only as an unwelcome burden, but as an alternative to something worse. We have modeled the potential consequences of substituting taxes on oil consumption for either higher non-oil taxes or reduced government spending, both as part of a larger deficit reduction package. [We show that] doing so can improve economic performance while reducing oil consumption if done right.” Read more »

Why Roll Yield Matters to Oil Benchmark Preferences

by Blake Clayton

In my last post I discussed how trading volumes show a migration into ICE Brent from NYMEX West Texas Intermediate (WTI), two of the world’s most watched crude oil benchmarks. The trend is part of Brent’s broader rise as the preeminent world price of oil. Here I’d like to show graphically part of the reason why some financial market participants are opting to trade the North Sea crude instead of its American cousin. It has to do with recent trends in the futures prices for both crudes. Read more »

Five Critical Questions About the U.S. Strategic Petroleum Reserve

by Blake Clayton

Constant chatter about an impending oil release from the U.S. Strategic Petroleum Reserve (SPR) was a prominent feature of the oil market last year. Much of the speculation was driven by the ongoing loss of crude from Iran, due to sanctions, and the possibility of a confrontation with Tehran over its nuclear program, which could have cut off traffic through the vital Strait of Hormuz. Read more »

Drilling into the American Energy Boom, in Four Charts

by Blake Clayton

One interesting feature of the U.S. hydrocarbon boom is the widening gap between the industry’s interest in drilling for oil and other liquids versus dry natural gas. It’s all about economics: the disparity in prevailing market prices and outlook between these commodities is dictating companies’ willingness to sink money into, and bear the risk of, trying to produce them. Read more »

Oil Boom… And Risk Management

by Blake Clayton

A story on NPR yesterday morning, “The Downsides of Living in an Oil Boomtown,” had an interesting portrait of the economic effects of high oil prices and booming oil production on Williston, North Dakota. The frenzied pace of job creation has led to high wages but also high turnover. A leap in demand for local goods like housing has caused massive inflation in housing prices and day care services. A similar story could be told of many other rural communities in states like Pennsylvania and Texas where the ramp up in oil and gas drilling activity has been a sudden shock on an otherwise rather static business scene. Read more »

The Real Reason Energy Traders Are Losing Sleep

by Blake Clayton

What’s roiling the oil market right now? The old familiar source of instability—unrest in the Middle East—is far from the whole story, though it still tends to be the first place Western pundits look when the world’s most important commodity is in turmoil. But this paradigmatic hangover from the 1970s has become less and less adequate. Read more »

New Study: Lessons Learned from the 2011 Strategic Petroleum Reserve Release

by Blake Clayton

As anyone who follows the oil market knows, speculation is rife that the White House may soon decide to tap the U.S. Strategic Petroleum Reserve (SPR). Whether they will remains to be seen. But before officials in the United States and other International Energy Agency (IEA) member countries take any action, it’s crucial they weigh the lessons of last summer’s release of national oil stockpiles. Read more »