No, speculation does not explain oil prices

Michael Giberson Sebastian Mallaby provides a clear exposition of what might be considered the mainstream economics story of why “speculation” is not to blame for the current high level of oil prices. [A] speculator can buy paper oil only if someone else sells to him. For every trader who bets on a price rise, there … More No, speculation does not explain oil pricesMore No, speculation does not explain oil prices

Pigou and the “bad things”

Michael Giberson Greg Mankiw called it “the Pigou Club in a Nutshell“, quoting the following from Tim Kane: we should aim to tax the bad things (noise, gasoline, trash, violent crime, evil foreign dictators) and untax the good things (homegrown profits, employment, innovation). But take another look at that list of “bad things”: noise, gasoline, … More Pigou and the “bad things”More Pigou and the “bad things”

Responding to higher energy costs, the home building version

Michael Giberson An article in the Washington Post discusses what you can do when building a new home to help keep energy costs low. Here Michael McKechnie of Mountain View Builders in Berkeley Springs, WV, provides a summary: McKechnie outlined the major steps to building a house with the lowest possible energy costs and perhaps … More Responding to higher energy costs, the home building versionMore Responding to higher energy costs, the home building version

Wind power and real-time pricing: Mutual benefits

Michael Giberson The marginal cost of generation from a wind power generator is essentially zero, which means once the generation is installed you pretty much want to use every bit of wind power generated. A problem, of course, is that wind-based generation is not particularly dispatchable. You don’t tell it when to run, you just … More Wind power and real-time pricing: Mutual benefitsMore Wind power and real-time pricing: Mutual benefits

Electricity market pricing and how to think about it

Michael Giberson Recently, William Hogan gave a presentation at IDEI and the Toulouse School of Economics titled Electricity Market Design: Coordination, Pricing and Incentives, or, as he more colloquially puts it early in the talk, “Electricity market pricing, and how to think about it.” The 42 minute video is available from the EU Energy Policy … More Electricity market pricing and how to think about itMore Electricity market pricing and how to think about it

KP vacation: biking the Lewis & Clark Trail

Lynne Kiesling I’m outta here for a couple of weeks of bicycling! Sunday night we will arrive in Pierre, South Dakota, from whence we bike east along the Missouri River to St. Charles, Missouri. We are biking the first one-third of the Lewis & Clark Trail in reverse, accompanied by their journals and other history-relevant … More KP vacation: biking the Lewis & Clark TrailMore KP vacation: biking the Lewis & Clark Trail

$4 gas is changing consumer behavior

Lynne Kiesling The New York Times has an article today that supports the anecdotal evidence I reported last month: consumers are substituting out of low fuel economy cars and into high fuel economy cars. With gasoline prices topping $4 a gallon, consumers are overwhelming dealerships with demand for the littlest vehicles in the showroom. Mr. … More $4 gas is changing consumer behaviorMore $4 gas is changing consumer behavior

On the morality of raising prices in an emergency

Michael Giberson Arnold Kling has some interesting insights on what is sometimes pejoratively referred to as price gouging: One of the issues that [Russ Robert’s didactic novel, The Price of Everything] raises–the very first one, in fact–is the morality of raising prices when something becomes scarce, such as flashlights after a weather disaster. Russ makes … More On the morality of raising prices in an emergencyMore On the morality of raising prices in an emergency

Current and future state of regional wholesale electricity markets

Michael Giberson What is the current and future state of regional wholesale electricity markets? FERC wants to know, and so it has assembled a panel of experts to appear at a July 1, 2008, technical conference to be held at the Commission. All interested persons are invited to attend, and there is no registration required. … More Current and future state of regional wholesale electricity marketsMore Current and future state of regional wholesale electricity markets