- Paul Krugman: For the Love of Carbon
- Links for 01-12-15
- 'Demand Factors in the Collapse of Oil Prices'
Posted: 12 Jan 2015 12:24 AM PST
What's the real reason Republicans are pushing for the Keystone XL pipeline?:
For the Love of Carbon, Commentary, NY Times: It should come as no surprise that the very first move of the new Republican Senate is an attempt to push President Obama into approving the Keystone XL pipeline... After all,... the oil and gas industry — which gave 87 percent of its 2014 campaign contributions to the G.O.P. — expects to be rewarded for its support.
But why is this environmentally troubling project an urgent priority in a time of plunging world oil prices? Well, the party line, from people like Mitch McConnell, the new Senate majority leader, is that it's all about jobs. ...
Let's back up for a minute and discuss economic principles. For more than seven years ... the United States economy has suffered from inadequate demand. ... In such an environment, anything that increases spending creates jobs. ...
From the beginning, however, Republican leaders have held ... that we should slash public spending... And they've gotten their way... The evidence overwhelmingly indicates that this kind of fiscal austerity in a depressed economy is destructive...
Needless to say, the guilty parties here will never admit that they were wrong. But if you look at their behavior closely, you see clear signs that they don't really believe in their own doctrine.
Consider, for example, the case of military spending. When it comes to possible cuts in defense contracts, politicians ... suddenly begin talking about all the jobs that will be destroyed. ... This is the phenomenon former Representative Barney Frank dubbed "weaponized Keynesianism."
And the argument being made for Keystone XL is very similar; call it "carbonized Keynesianism." ... But government spending on roads, bridges and schools would do the same thing. ... If Mr. McConnell and company really believe that we need more spending to create jobs, why not support a push to upgrade America's crumbling infrastructure?
So what should be done about Keystone XL? If you believe that it would be environmentally damaging — which I do — then you should be against it, and you should ignore the claims about job creation. The numbers being thrown around are tiny compared with the country's overall work force. And in any case, the jobs argument for the pipeline is basically a sick joke coming from people who have done all they can to destroy American jobs — and are now employing the very arguments they used to ridicule government job programs to justify a big giveaway to their friends in the fossil fuel industry.
Posted: 12 Jan 2015 12:06 AM PST
Posted: 11 Jan 2015 09:43 AM PST
Demand factors in the collapse of oil prices: The price of oil passed another milestone last week, falling below $50 a barrel, a level that I had not expected to see again in my lifetime.
It's interesting that we crossed another milestone last week, with the yield on 10-year Treasury bonds falling below 2%. That, too, is something I had not expected to see.
And these two striking developments are surely related. I attribute sinking yields to ongoing weakening of the global economy, particularly Europe. And slower growth of world GDP means slower growth in the demand for oil. Other indicators of an economic slowdown outside the United States are falling prices of other commodities and a strengthening dollar.
A month ago I provided some simple analysis of the connection between these developments... The price of oil has fallen another $8/barrel since then, prompting me to update those calculations. ... On the basis of the above regression,... of the $55 drop in the price of oil since the start of July, about $24, or 44%, seems attributable to broader demand factors rather than anything specific happening to the oil market. That's almost the same percentage as when I performed the calculation using data that we had available a month ago.
So what's been happening on the supply side of oil markets is important. But so is what's been happening on the demand side. ...
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