Thursday, July 24, 2008

5 Lessons from Econ Blogs on Oil Prices

Even with my summer bike commute and Prius, like many Americans I can’t help but notice the price of gas, which is hovering above $4.50 a gallon in Palo Alto

1. Justin Wolfers over at the Freakonomics blog finds that the best guess to predicting the future price of oil price is today’s prices.

2. With high prices consumers are changing their buying habitts. Greg Mankiw highlights 11 (and counting) examples of cross price elasticity (that is a measure of the impact of the price of one good (gas) on another)

3. Don’t believe the airline industry, oil speculation is not the problem. Refuting a letter from airline executives that speculation is the cause of the high price of oil, although not an economist a good summary of economists views (including me) can be found at Less Than A Shoestring.

4. A lot of the increase in oil prices can be blamed on the weak dollar. Although the causation may go the other way too. See Econobrowser

5. High oil prices may hurt women’s rights. Chris Blattman a few months back summarized an article by Michael Ross of UCLA that showed the lack of women’s rights is linked to size of oil exports.
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