My friend Steven Kopits at Douglas-Westwood has written an excellent and thought provoking analysis of the likely effects of high oil prices on the American economy going forward. Entitled “Oil: What Price Can America Afford?” the treatise begins with an analysis of the last six recessions, occurring over a 37-year period, in the American economy. Oil, Steven notes, played the pivotal role in five of the six recessions and a tangential role in the sixth recession. Through his review of the recessions and oil prices, Steven makes some noteworthy conclusions.

• “In every case when oil consumption breeched 4% of GDP, the US has suffered a recession, and indeed, the current US recession began within two months of oil hitting the 4% threshold (US $80 per bbl).”

• “Whenever oil prices have increased by more than 50% year-on-year (trailing 12 month average divided by the previous 12 month average), a recession has followed shortly.”

• “Oil price increases should not be so great that a potential demand adjustment should have to reach 0.8% of GDP on an annual basis, as shedding demand at this rate has generally been associated with recession.”

Put into a policy context, based on the above, Steven believes three alternative approaches to oil and climate policy exist;

• Prioritize climate policy with economic impacts secondary;

• Prioritize climate policy while taking a cautious approach to the economy; or

• Prioritize economic well-being, with climate policy secondary.

You can read Steven’s entire white paper at EPmag.com.

Thanks for the memories

It is with mixed emotions that I announce my departure from Hart Energy Publishing. I am saddened because I have worked with a great group of people for the last nine years. That is important, especially in today’s environment where people tend to be treated as an expendable commodity. In publishing, people are your primary asset. To be sure, there is a bit of capital equipment involved but its value pales before that of a group of dedicated employees. The publishing product, after all is said and done, is their words, thoughts, and experiences.

It’s great to work with good people but super to work with fun people. The E&P crew is an irreverent crowd. Insults and snide remarks are traded in jest. Laughter is frequent. Tough times breed a camaraderie I have seldom experienced before. I will miss these guys. It’s also been fun designing and producing the myriad print and online products in the E&P portfolio. I like to think that we have broken some new ground along the way. We did not know much about maps but we took the plunge and now produce what I believe are some of the best maps in the industry. The same goes for a number of other products.

I will also miss the special relationships I have developed with many of our customers and readers around the globe. I will not be traveling abroad as much as I have been, but rest assured that I will catch up with you in the not too distant future.

On the other side of the coin, I will retain my ties with E&P. I have accepted their challenge to form and chair an editorial advisory board. Some of you out there — and you know who you are — will be getting a call from me soon.

Finally, I won’t be leaving the industry so the chances are good that I will see you around the bend.

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