Energy

Reda Cherif, Fuad Hasanov, Aditya Pande, 24 September 2017

The motor vehicle was very quick to replace horses in the early 20th century, and the advent of the electric car suggests that another profound shift in transportation and energy could be around the corner. This column projects how different rates of electric car adoption will effect oil demand and consumption over the next three decades. In a fast-adoption scenario, oil prices could converge to the level of current coal prices by the early 2040s. Even under a slow adoption scenario, oil could become obsolete before it is depleted.

Daron Acemoğlu, Ufuk Akcigit, Douglas Hanley, William Kerr, 05 July 2017

Substantial headway has been made in the transition to clean technology, but recent political developments threaten this progress. This column examines the transition process using a microeconomic model of competition in production and innovation between clean and dirty technologies. The results suggest that production taxes can deal with dirty emission externalities, while research subsidies are sufficient to redirect innovation towards clean technologies. However, delaying intervention will drastically slow down the overall transition.

Mark Gradstein, Marc Klemp, 23 June 2017

A large literature has argued that natural resources have a negative effect on economic development. The Brazilian data used in this column fail to confirm these findings. Economic activity, as measured using night-time light data, increases more during periods of rising oil prices in localities with better access to oil.  Oil revenue windfalls accruing to oil-rich locations and spillovers to adjacent locations drive this effect. 

Amyra Asamoah, Emine Hanedar, Baoping Shang, 12 June 2017

Despite a growing consensus in favour of reform of costly and environmentally damaging energy price subsidies, many countries remain resistant. This column takes stock of recent developments using an updated energy price database. Environmental concerns seem to be playing a larger role in driving reform, but most reforming countries are found to have been facing large fiscal imbalances. These countries may need additional, deeper measures for the reforms to last.

Christiane Baumeister, Lutz Kilian, 18 May 2017

The sluggish growth of the US economy after the 2014-2016 decline in the oil price surprised many economists. This column argues that it should have been expected. The modest stimulus to private consumption and non-oil business investment was largely offset by a large decline in investment by the oil sector. Growth was further slowed by a simultaneous global economic slowdown, reflected in lower US exports. 

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