I am back from my electricity and experimental economics-fest in Washington, where I read this good Washington Post column by David Ignatius on the question of whether attacking Iraq is about oil. He points out some of the important economics of global oil markets, which politicians and pundits often conveniently forget. He also points out the possibility that oil prices could actually decline dramatically in the next year to 18 months.
UPDATE: Nat Treadway, an electricity industry expert upon whom I rely for clear and sophisticated analysis, pointed out to me in an email that he was not entirely impressed with Ignatius’ article:
It seems that the Post’s David Ignatius is unwilling to state whether HE thinks it’s all about the oil. I understand and agree with his remarks about future
oil prices, but that perspective (costs to decline) would uphold the “it’s all about the oil” thesis, would it not? He targets those who take this position, but I don’t think it’s
much of an article because he plays with a serious premise without taking a stance.
This is a good point, and one that had not occured to me, so I thank Nat for his contribution. Hmm, I wonder if the Socratic-type analyses through which I put my students has inured me to noticing such things … ?