Back to OurEnergyLibrary search




Oil, Economic Growth and Strategic Petroleum Stocks

Oil, Economic Growth and Strategic Petroleum Stocks

Full Title: Oil, Economic Growth and Strategic Petroleum Stocks
Author(s): Carmine Difiglio
Publisher(s): Elsevier
Publication Date: November 1, 2014
Full Text: Download Resource
Description (excerpt):

An examination of over 40 years of data reveals that oil price shocks are invariably followed by 2e3 years of weak economic growth and weak economic growth is almost always preceded by an oil price shock. This paper reviews why the price-inelastic demand and supply of oil cause oil price shocks and why oil price shocks reduce economic growth through dislocations of labor and capital. This paper also reviews the current state of oil supply security noting that previous episodes of supply instability appear to have become chronic conditions. While new unconventional oil production technologies have revitalized North American oil production, there are significant barriers to a world-wide uptake of these technologies. Strategic petroleum stocks could provide a large measure of protection to the world economy during an oil supply disruption if they are used promptly and in sufficient volume to prevent large oil-price spikes. Despite the large volume of worldwide emergency reserves, their effectiveness in protecting world economies is not assured. Strategic oil stocks have not been used in sufficient quantity or soon enough to avoid the economic downturns that followed past oil supply outages. In addition, the growth of U.S. oil production has reduced the ability of the U.S. Strategic Petroleum Reserve to protect the economy following a future oil supply disruption. The policy implications of these findings are discussed.

All statements and/or propositions in discussion prompts are meant exclusively to stimulate discussion and do not represent the views of OurEnergyPolicy.org, its Partners, Topic Directors or Experts, nor of any individual or organization. Comments by and opinions of Expert participants are their own.

Sign up for our Press Release Distribution List

    Your Name (required)

    Your Email (required)

    Please sign me up to receive press releases from OurEnergyPolicy.org.