Last yr I published about the two major energy revolutions occurring internationally, the shale revolution–mainly in the US–, and the renewable energy revolution, concentrated more on systems than geography but with big concentrations in Europe and significantly Asia and the Americas. Two stories in the Financial Times (registration/subscription required), which has been doing a great job covering energy lately, illustrate that we remain in the early days of both.
Bigger changes lie ahead. One story covers the development of the “South Central Oklahoma Oil Play”, or SCOOP, an acronym that’s not used to me and, I suspect, many of my readers. Continental Oil, a significant player in the Bakken and other shale oil resource areas, has apparently reported that SCOOP may contain up to 3.6 billion barrels (oil equivalent) of recoverable coal and oil. That’s more oil than was produced in Alaska in the last 15 years, predicated on the graphic associated with this article.
Along with the unconventional portions of the Permian Basin in Texas and New Mexico and Ohio’s Utica shale, and with the reviving fluids production from Wyoming’s Powder River Basin and elsewhere, the upside for US essential oil result appears significant still. Its economics could become challenging if oil prices remain weak for further than the next year or two, but our picture of gas and essential oil as mature resources may need to be revised. The title of the other article, “US Solar and Wind Begin to Outshine Gas” seized my attention. You might have observed a decrease in my blogging frequency, recently. I’ve been preoccupied with task work and personal matters for the last couple months, but I should be back to my normal pace by October. There’s no shortage of topics worth discussing here.
Does it offer any insight into the best method of recovery? In the first a few months of the crisis, macroeconomists reposed great faith in the forces of the Fed and other central banking institutions. Since his demonstration, the Fed has cut its key rate by five percentage factors to only 0-0.25%. Its typical weapons have demonstrated insufficient to the duty.
This has shaken economists’ faith in financial policy. Unfortunately, they are also horribly next divided about what comes. Mr Krugman as well as others advocate a bold fiscal expansion, borrowing their logic from Keynes and his contemporary, Richard Kahn. Kahn remarked that a dollar allocated to public works might generate more than a dollar of result if the spending circulated frequently through the economy, stimulating resources that may have lain idle in any other case. Today’s economists disagree over the size of this multiplier. Mr Barro considers the estimations of Barack Obama’s Council of Economic Advisors are absurdly large. Mr Lucas calls them “schlock economics”, contrived to justify Mr Obama’s projections for the budget deficit.
- Track results across all BA groups
- $397.7 billion
- About 1.5x (times) then-current salary by age 35
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- 9 years back from Pittsburgh
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But economists are not exactly drowning in research with this question. Mr Krugman calculates that of the 7,000 roughly papers published by the National Bureau of Economic Research between 1985 and 2000, only five mentioned fiscal policies in their title or abstract. Do these public spats harm macroeconomics? Greg Mankiw, of Harvard, recalls the upset exchanges in the 1980s between Robert Solow and Mr Lucas-both eminent economists who could not take one another seriously.
This vitriol, he writes, attracted attention, much like a bar-room fist-fight. But he considers it also dismayed youthful scholars, who provided these macroeconomic disputes a wide berth. By these accounts, the period of intellectual tranquility that followed in the 1990s must have been a golden age group for macroeconomics. But the brackish consensus also appears to leave students cold.