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331. Do Energy Prices Respond to U.S. Macroeconomic News? A Test of the Hypothesis of Predetermined Energy Prices

Author:
Lutz Kilian and Clara Vega
Publication Date:
11-2008
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Models that treat innovations to the price of energy as predetermined with respect to U.S. macroeconomic aggregates are widely used in the literature. For example, it is common to order energy prices first in recursively identified VAR models of the transmission of energy price shocks. Since exactly identifying assumptions are inherently untestable, this approach in practice has required an act of faith in the empirical plausibility of the delay restriction used for identification. An alternative view that would invalidate such models is that energy prices respond instantaneously to macroeconomic news, implying that energy prices should be ordered last in recursively identified VAR models. In this paper, we propose a formal test of the identifying assumption that energy prices are predetermined with respect to U.S. macroeconomic aggregates. Our test is based on regressing cumulative changes in daily energy prices on daily news from U.S. macroeconomic data releases. Using a wide range of macroeconomic news, we find no compelling evidence of feedback at daily or monthly horizons, contradicting the view that energy prices respond instantaneously to macroeconomic news and supporting the use of delay restrictions for identification.
Topic:
Economics, Energy Policy, Oil, and Macroeconomics
Political Geography:
United States and North America

332. Energy Alarmism: The Myths That Make Americans Worry about Oil

Author:
Daryl Press
Publication Date:
04-2007
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Many Americans have lost confidence in their country's “energy security” over the past several years. Because the United States is a net oil importer, and a substantial one at that, concerns about energy security naturally raise foreign policy questions. Some foreign policy analysts fear that dwindling global oil reserves are increasingly concentrated in politically unstable regions, and they call for increased U.S. efforts to stabilize—or, alter-natively, democratize—the politically tumultuous oil-producing regions. Others allege that China is pursuing a strategy to “lock up” the world's remaining oil supplies through long-term purchase agreements and aggressive diplomacy, so they counsel that the United States outmaneuver Beijing in the “geopolitics of oil.” Finally, many analysts suggest that even the “normal” political disruptions that occasionally occur in oil-producing regions (e.g., occasional wars and revolutions) hurt Americans by disrupting supply and creating price spikes. U.S. military forces, those analysts claim, are needed to enhance peace and stability in crucial oil-producing regions, particularly the Persian Gulf.
Topic:
Security, Oil, and Political Economy
Political Geography:
United States and America

333. PolicyWatch #1300: The Consequences of $100 Oil

Author:
Simon Henderson
Publication Date:
11-2007
Content Type:
Policy Brief
Institution:
The Washington Institute for Near East Policy
Abstract:
Over the next few days, oil is likely to break the $100 per barrel mark -- a price that will further raise U.S. consumer costs and conflict with economic measures such as the October 31 interest rate cut. Ironically, good news, such as predictions of greater economic growth, is just as likely to push oil prices above $100 as bad news. In either case, the price spike means both continuing danger and new opportunities for U.S. policy in the Middle East.
Topic:
Energy Policy and Oil
Political Geography:
United States and Middle East

334. U.S. Energy Security and Oil Revenue Transparency

Publication Date:
05-2007
Content Type:
Working Paper
Institution:
The Wilson Center
Abstract:
A diverse set of panelists addressed the challenges and opportunities presented by the growing importance of energy security as a central element of the U.S. foreign policy debate. The first panel featured speakers from the non-profit, private and financial sectors discussing the links between U.S. energy security and oil revenue transparency. All panelists focused on how a lack of transparency in energy transactions can contribute to both national instability in oil-rich nations and energy insecurity in oil-importing countries. Revenue transparency was seen by all as a critical first step in combating corruption. Panelists also noted the importance of conceiving of transparency in the broadest terms, to encompass budget transparency, contract transparency, reserves transparency, and transparency of concessions.
Topic:
Foreign Policy, Energy Policy, International Political Economy, and Oil
Political Geography:
United States

335. Europe's External Energy Policy: Between Geopolitics and the Market

Author:
Richard Youngs
Publication Date:
11-2007
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
While energy security has gradually been incorporated into the EU's foreign policy calculus, the declared approach of extending a nexus of 'market-governance' energy norms has been realised only to a limited extent. The EU has eschewed a comprehensively political approach to energy security, with its energy security policy currently hovering ineffectively between market and geopolitical approaches. The EU needs to address more effectively the way in which governance structures in producer states impact upon European energy interests.
Topic:
Energy Policy, Markets, and Oil
Political Geography:
Europe

336. Berlin's Russia Challenge

Author:
Angela Stent
Publication Date:
04-2007
Content Type:
Journal Article
Journal:
Insight Turkey
Institution:
SETA Foundation for Political, Economic and Social Research
Abstract:
Russia has found an innovative way to ring in the New Year with its European partners: threatening to cut off energy supplies. At the beginning of 2006, it was gas exports through Ukraine; in January 2007, it was oil supplies through Belarus. Although President Lukashenko backed down and oil again flowed to Europe, the actions of pipeline monopoly Transneft –and President Putin's failure to inform Germany about the impending cutoff– presented German Chancellor Angela Merkel with an unwelcome start to Germany's EU presidency.
Topic:
Oil
Political Geography:
Russia, Europe, Ukraine, Germany, and Berlin

337. Whither Turkey's Energy Policy?

Author:
Yusuf Yazar and Hasan Hüseyin Erkaya
Publication Date:
10-2007
Content Type:
Journal Article
Journal:
Insight Turkey
Institution:
SETA Foundation for Political, Economic and Social Research
Abstract:
Turkey is an energy importer. It has a growing economy demanding about 7 % more energy each year. It has about 41,000 MW electric power generation capacity, and this capacity must be doubled in the next 10 year to meet the demand. Natural gas has a significant share in electricity production, which should be reduced. Domestic energy supplies and renewable energies should be employed in meeting increasing energy demand. Turkey has taken major steps toward liberalization of its energy market. Private enterprises are expected to invest in the energy market in a timely manner. The country also has the potential to be an "energy corridor" between the gas and oil producing countries and the importing European countries.
Topic:
Oil
Political Geography:
Europe and Turkey

338. Geopolitics of Energy: China and the Central Asia

Author:
Xin Ma and Mehmet Öğütçü
Publication Date:
10-2007
Content Type:
Journal Article
Journal:
Insight Turkey
Institution:
SETA Foundation for Political, Economic and Social Research
Abstract:
Energy-deficit China and resourceful Russia/Central Asia have been engaged most intensely over the past decade in a complex relationship involving expanded oil and gas trade, cross investment, pipelines and geopolitical ambitions. Today, Central Asia represents for China both a potential market for its growing economy and a source of strategically important raw materials. It is also important for ensuring stability and security in China's restless Xinjiang- Uyghur Autonomous region on the other side of the border. The verdict is not out yet, but clearly China has made significant progress in achieving its goals vis-à-vis Central Asia, namely (i) support regional stability, (ii) obtain access to energy resources on a mutually beneficial basis, and (iii) further develop economic relations with region. The Russia factor is omnipresent and swings from confrontation to co-operation as national interests and regional politics dictate.
Topic:
Oil
Political Geography:
Russia, China, and Central Asia

339. Good Governance of the National Petroleum Sector

Author:
Glada Lahn, Dr Valérie Marcel, John Mitchell, Dr Keith Myers, and Prof Paul Stevens
Publication Date:
04-2007
Content Type:
Working Paper
Institution:
Chatham House
Abstract:
Beginning in February 2005, Chatham House, London and the Centre for Energy, Petroleum and Mineral Law Policy (CEPMLP) at Dundee University facilitated a dialogue between participants from government, national and international oil companies, NGOs and financial institutions from 23 developing and developed oil-and gas-producing countries. The conclusions of this dialogue have been supplemented with in-house research on international governance practices. The main conclusions of the project to March 2007, and the 40 general governance benchmarks for the petroleum sector comprised within this Report , are set out in Good Governance of the National Petroleum Sector: The Chatham House Document.
Topic:
Government, Non-Governmental Organization, and Oil
Political Geography:
London

340. The Turn to Statism in Russian Economic Policy

Author:
Philip Hanson
Publication Date:
03-2007
Content Type:
Journal Article
Journal:
The International Spectator
Institution:
Istituto Affari Internazionali
Abstract:
Since 2003, state control in the Russian economy has increased significantly. This has affected mainly but not only the oil industry. This policy development gives some grounds for concern about Russia's long-run growth. Its origins lie in power struggles within the political elite, in efforts by members of that elite to enrich themselves and in a profound distrust on the part of that elite of any sources of power that they do not themselves control. One result is that business confidence has been dented, the growth of oil output has slowed, and future GDP growth depends more heavily than before on further growth in oil prices.
Topic:
Economics and Oil
Political Geography:
Russia