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Binyamin Applebaum cites different experts on how U.S. Fed policy could play out in 2017-2019. He cites Fed governor Dudley that there is increased uncertainty under the Trump administration, and other economists who say that aging population, lack of innovation, and steady growth under the Obama administration with falling unemployment, make it unlikely that growth will jump well above 2%. The Fed's own forecasts are for for under 2% growth in 2017 and 2018, and Applebaum says this is not expected to change by much. Janet Yellen does not see a huge stimulus as a positive, says Applebaum, because it would increase the deficit at the wrong time. He cites Yellen who prefers to see more fiscal space now that unemployment is down to 4.6%. Steady growth in the view of Fed officials has taken up much of the backlog of people looking for work since the 2008 crisis. Yellen sees some fiscal space as desirable with high debt to GDP ratio at 77 percent, so that the government could respond to some adverse event in the future. A Republican Congress is also averse to sudden increases in the deficit. See the link to views about the uncertainty of how things can play out in a separate article by Neil Irwin of NYT. ...

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Vernon Smith, Professor of Economics and Law at Chapman University, 2002 Nobel prize winner, makes an effort to explain in simple language what has happened in the housing bubble, the various aspects of this crisis, and what might help and what might be difficult to accomplish in the rescue plan. He thinks that a reverse auction is awfully hard to do with some success especially as Treasury has no experience with this, and thinks its better to inject capital in banks and companies in return for equity stakes, which incidentally is what Gordon Brown's plan in the UK intends to do. With that Chapman believes Treasury has experience having recently demonstrated that several times including the way Treasury and the FDIC assisted JP Morgan takeover Washington Mutual. He asks readers to look at the Shiller price index graph from 1987 and asks do they think the home prices which only in 2006 and 2007 gradually turned downward and plumetted in 2008, has it run its course. The answer from the graph looks like a no after such a long runup in prices since 1987 and there is a ways to go in 2009 and into 2010. In this context and the context of a declining economy wiith higher unemployment what are the prospects of stabilizing home prices anytime soon? Which suggests injection of capital in return for equity by the government to recapitalize them and get lending back up, as well as act a a clearinghouse to take some of the fear risk out of transactions, as some of the more sensible solutions. And at the same time putting in a comprehensive homeowner relief program with taxpayer money and lender participation to have the lenders modify mortgages, or something like the Hubbard or Feldstein plans, to keep homeowners in their homes. And there is one bit of good news in all this oil prices have already hit $80 a barrel and are headed downward, and so are the prices of all commodities including steel, and the prices of soybeans, corn wheat and so on. ...

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Attacks by Houthi rebels in Yemen on Sauid Arabia's Aramco oil company installations are adding to geopolitical tensions. Houthi rebels in Yemen are supported by Iran and are in a war with a Saudi Arabia led coalition. This report says that the three year conflict has reached a point where instead of targeting Riyadh with missiles the Yemeni rebels in Sanaa are now targeting oil installations of Saudi Arabia. The rebels ousted a Said supported government in Sanaa and the the Saudis have failed to oust them from Sanaa, yet the conflict continues. The increase in geopolitical tensions between Iran and Saudis is pushing up oil prices along with the collapse of Venezuela's oil industry and production. Prices reached $75 a barrel in April 2018. Damage from a Yemeni missile hit a Saudi tanker in the Red Sea, a latest sign that the conflict could disrupt oil tanker traffic going towards the Suez Canal.  Trump administration plans to scuttle the Iran nuclear deal or renegotiate it are also increasing tensions. France's Macron favors renegotiating it compared to scuttling the whole deal, a point he made at the U.S. Congress this week, saying also that France will respect the nuclear deal with Iran. Tensions throughout the Middle East are now part of the rival powers Iran and Saudi Arabia and their proxy allies in the region seeking more influence. ...

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Important year end reveiw of the oil price forecasting work of so many anlaysts and where they failed . The IEA and the US Enery Dpt forecast have year after year underestimated this pirce by over 20%. Analysts change the price forecasts within a couple of weeks based on changing information and assumptions. Of all this the Saudi Arabian forecasts have ben within 12 % of what has actually ocurred according to a study by Ronald Berger Strategy Consultants of Muich, Germany. And whats their forecast for 2008. By extrapolating from the Saudi budget and the assumptions, used such as giving a wide margin to avoid a deficit in the budget if oil prices undershot by a wide margin, one gets $75 for US benchmark crude. Forecast by experts are in the neighborhood of $80 average for the whole year 2008. Goldman recently revised theirs upwards from $85 average for 2008 to $95 within a 4 week period. How good is the Goldman forecast. No one really knows. Lehman has a forecast of $84 average for 2008 and bases it on the opacity of the market because no one knows what OPEC will do with supply and China does not provide good information on demand. So basically anlysts are adding an uncertainty premium to the price of oil. And this is especially so because as the Chief Economist at IEA says global space capacity is so thin and any event can influence price. Last year the rhetoric about Irans nuclear intentions was enough to stir up the price, as were other smaller events disrupting supplies. But the Iranian situation has since cooled down and diplomatic solutions are in the works. So what to expect in 2008 in the way of political uncertainty. Iraq, Iran, Palestine, Lebanon have all seen a cool off in the ast couple of years and the Bush administration rhetoric has become outmoded as has other rhetoric from Iran so that does'nt look like it will stir up oil prices in 2008. Still there will be some uncertainty premium about supply from OPEC and demand from China and India. And demand from the Middle Eastern oil producing countries themselves as well as the increasing demand in India and China will mean that lower demand in the US because of a recession will still mean an increase in global demand over 2007 of 1.5 million barrrels a day over 2007's 85 million barrels a day. What will change the dynamics of this situation is the government mandated fuel economy for all vehicles on the road with Europe more aggressive in this area under the pressures of global warming. If this impacts India, China and Russia as these fuel saving technologies are transferrred there overall consumption should see an impact. Europe's targets are only 4 years away for 2012. And the environment may cause China to bring in newer technologies that both contribute to improving environment and conserving energy. Because China's environmental record is almost catastrophic one could see some of this happen much sooner than expected after the Olympics in 2008. All that might change the way the world looks at oil and its use, and all energy sources and their use. ...

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U.S. president Obama visits Saudi Arabia in April 2016. President Obama presents arguments for forging "a cold peace" between Iran and Saudi Arabia after proxy conflicts in the Middle East. During the visit president Obama will encourage dialogue between Iran and Saudi Arabia, at a time when Saudis are skeptical about U.S. policies in the region. Saudi Arabia has reduced the economic gains to Iran from lifting of sanctions and entering the oil market by ramping up Saudi production to bring down prices. The situation also affects Russia and Venezuela.

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Saying that these countries had significantly cut imports from Iran, the U.S. government gave exemptions from the sanctions on Iran to 10 European countries and Japan. Exemptions were given to Belgium, Britain, Czech Republic, France, Germany, Greece, Italy, the Netherlands, Poland and Spain. This leaves 11 countries facing possible sanctions including China, India and S. Korea, with negotiations underway with these three major importers. The sanctions law passed by the U.S. Congress gives the government room to avoid damage to global oil markets and U.S. allies.

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This is a big desicion by the Obama administration, and has global implications for the amount of oil consumed and the emissions discharged. The Obama administration will introduce one national standard for automile emissions and mileage standards, replacing the patchwork of standards and skipping over the challenges to the California standards by using those standards to set the national rules. The rules take effect in 2012. It will create a new national standard for a car and light truck fleet in the USA, that is 40% cleaner and more fuel efficient by 2016 than it is now, with a new average of 35.5 miles per gallon. The current national standard is 25 miles per gallon, and this standard has fallen way behind the Japanese and the Europeans. The Europeans went through their battles for fuel efficiency a few years ago with auto industry resistance, and this was finally settled with tougher standards, giving the European industry advantages in technology over the Americans. The American car industry stalled higher standards, and what standards were passed were whittled down by heavy lobbying in Congress. As a result a battle raged between those interested in conservation and the environment and the Detroit car industry, especially in a deteriorating global environment for this type of prolific oil consumption on American highways. This lack of foresight on the part of Detroit carmakers, and their management, accelerated their financial collapse in 2008 and 2009, as large car and truck sales collapsed. That this tough new standard of 40% improvement in 2016, would in fact not have been possible without this fiinancial collapse and turning to the government for a bailout - with the entire board of General Motors being replaced- is one of the ironies of this situation. This decision will almost certainly accelerate the development of smaller models, and bring the kind of attention to them that will give them the quality and features and comfort to make them command higher prices and become profitable, as is the case in Europe. For too long the American small car became synonymous with being a lesser car in many dimensions of design, quality, comfort and performance, so that it became a cheap car that you upgraded from to a larger car as you became affluent. It had been that way, but did not have to be that way after the world had changed. And the larger models like the pickup trucks and large cars are more likely to be phased out with the new regulations. This will also bring a `new sanity to oil prices, as the reduced consumption in the US will accomodate the increased consumption in India from the small cars like the Tata Nano which look set to sell in the millions, and still keep oil affordable for tight budgets worldwide. In this sense it is a victory for global good sense. For President Obama this is a personal quest, as he co-sponsored 2 bills in 2006, during this second year in the US Senate, one to raise fuel economy standards, and the other to encourage the use of alternative fuels....

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Higher oil production in Saudi Arabia in 2012 as the Saudis support U.S. sanctions against Iran.

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The shift away from Iranian oil with U.S. pressure and sanctions, and higher oil prices, could pose challenges for the Indian macroeconomic outlook in 2020.

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Krugman says the the higher population growth in Texas has led to higher job growth there relative to the rest of the country. Other factors mitigating the effects of the recession in Texas- the housing and mortgage lending laws in Texas prevented the building up of home equity debt and foreclosures that hit other states, and the oil industry in Texas helped with higher oil prices. Lower wages in Texas, lower living costs, and lower housing costs have attracted jobs to the state. In June 2011, the Texas unemployment rate was 8.2%, lower than California and close to that of New York.

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U.S. gasoline prices at the pump drop below $3.00 in November 2014.

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hOw the conventional thinking about the availability of oil to supply ever increasing demand is changing. At some point oil availability will not satisfy increasing demand in the very near term. Current production is 85 million barrels a day, some experts see the supply ceiling at 100 million barrels a day and that ceiling could be reached as demand increases by 2012. The reasoning is based not on what is under the ground but on what is likely to happen considering all the factors, political factors with countries preferring to leave oil in the ground, shortages of engineers and high prices of drilling rigs and equipments creating constraints, and the inflation in exploration costs leading to underinvestment.

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Venezuela faces an uncertain future after U.S. efforts to support Mr. Guaido and call for new free and fair elections have failed. With help from Russia the Venezuelan economy is showing signs of recovery from the steep decline and high inflation in 2019. Oil production is expected to reach 1 million barrels a day in 2020 after falling to 650,000- 700,000 barrels a day in 2019. Russia's oil company Rosneft provides critical help for Venezuelan oil sales and maintenance in oil fields.  National Security Adviser John Bolton is faulted for his advice to president Trump on Venezuela, that merely voicing support for 36 year old Guaido, would lead to regime change without action from the U.S. With the recovery in Venezuela with help from Russia and Cuba, Mr. Guaido's popularity has dropped by 20 points to 38%, according to a Venezuelan pollster Datanalisis. Most Cubans and Venezuelans in the U.S. are in Florida where there is support for new elections, and Mr. Trump continues to support Mr. Guaido. The lack of support for change from other countries including Europe, India, Turkey, and Mexico have led to a stalled situation in Venezuela. There is concern for the steep inflation, the migration of about 4.5 million Venezuelans, the shortages of critical supplies as a result of the economic collapse in 2019. The situation is stabilizing for the government yet the future of Venezuela with U.S. sanctions and weak economy leaves Venezuela in a precarious situation. Venezuela continues to be an example of how well meaning changes for social justice can lead to political changes that bring about economic collapse. This happens  when business and the economy flounder under mismanagement and corruption under crony socialism, a variant of crony capitalism. The old capitalist class and the privileged families who ran the country under its old two party system are gone. Replaced with a new class. The trying out of untested economic ideas in the quest for social balance leads to economic mismanagement, loss of critical human resources which leave the country, and a higher degree of poverty with shortages than before.  Today in Latin America Brazil shows how allowing generous pension benefits at the expense of basic needs and public services in the budget can hurt the economy. Argentina's overborrowing once again shows how this leads to IMF loans and harsh economic austerity. Chile shows how not financing pensions and public services can lead to collapse of public confidence and riots. Venezuela shows how the quest for social justice and reducing privilege can itself get flawed, leading to mass migration of as many as 4.5 million citizens. This happens under models that vary from free enterprise models to socialist or nationalist models showing that models can be less relevant than good sense and good management. In the beginning and for some time each of these models worked well, commodity price supported booms concealed real problems. Avoiding extremes, prudent spending, good investment and hard work, investment in education and infrastructure, building consensus, and good management, is critical for the future to avoid the bad outcomes facing much of Latin America. A lesson also for Asian and African countries that basic virtue is more important than socialism or free enterprise or nationalism when it comes to development.   ...

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This issue of the Economist magazine looks at Saudi oil price cuts and the future for shale oil in the world's energy mix. In the short run overleveraged companies in the shale oil business in the U.S. will be affected by oil prices below $50 a barrel. The Economist points out that shale oil deposits are extensive in the U.S. and other parts of the world. The upfront costs are as little as $1.5 million for drilling a well. As a result the economics of shale will depend on new advances in technology and efficiency to bring costs down below existing costs averaging of about $57 a barrel, with some producers at costs of $35 a barrel. Because of technology advances anticipated in the field it points to shale oil as a reliable source of low cost oil supplies in the future, keeping oil prices lower than in the past and much less subject to manipulation by cartel pricing or oil price shocks. The lower volatility and lower level of oil prices will be good for the rapidly growing economies in Asia and the developed economies of Europe and the U.S., and for countries in Latin America such as Argentina with large shale deposits....