"Real" OIl Prices, 1983 -- 2015: Joh Kemp, December 14, 2015

From John Kemp:

Interesting graph, huh? This goes back all the way to 1983 so one can't say Kemp cherry-picked the time period. It almost appears the period between 2004, or maybe even as late as 2005, and 2014 was an anomaly or an outlier, and that the "true" price for oil runs between $20 and $40 per bbl. In hindsight, something happened in 2005 - 2007 that operators drilling for conventional oil allowed the price to spike and give operators working unconventional oil fields an opportunity. I don't know but it is an interesting graph.

Now, about that "something happened in 2005 - 2007." In fact, more specifically it was Brookings Papers on Economic Activity, Spring 2009, that provides a study of the "Causes and Consequences of the Oil Shock of 2007 - 2008," out of the University of California, San Diego.

The abstract:

This paper explores similarities and differences between the run-up of oil prices in 2007–08 and earlier oil price shocks, looking at what caused these price increases and what effects they had on the economy.

Whereas previous oil price shocks were primarily caused by physical disruptions of supply, the price run-up of 2007–08 was caused by strong demand confronting stagnating world production. Although the causes were different, the consequences for the economy appear to have been similar to those observed in earlier episodes, with significant effects on consumption spending and purchases of domestic automobiles in particular. Absent those declines, it is unlikely that the period 2007Q4–2008Q3 would have been characterized as one of recession for the United States. This episode should thus be added to the list of U.S. recessions to which oil prices appear to have made a material contribution.

Although the article tends to emphasize the consequences, reading between the lines confirms what the blog has pointed out numerous times with regard to Saudi Arabia's ability to increase production when necessary. According to wiki, this is the mission of OPEC:

OPEC's mission is "to coordinate and unify the petroleum policies of its member countries and ensure the stabilization of oil markets, in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers, and a fair return on capital for those investing in the petroleum industry."

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The Health of ObamaCare

The weekend was incredible. The Christmas issue (or was it the "holiday") issue of The New York Review of Books arrived; and the Friday and Saturday issues of The Wall Street Journal with "Arena" and "Review" were available. More than enough to keep me busy during spare moments between family events with out-of-town company all weekend.

From "Arena," The WSJ, "The Coming Shakespeare Extravaganza: The 400th Anniversary of Shakespeare's death next year is sparking an explosion in books, tours, and spinoff, none of which I will be interested in except for an occasional book, perhaps. But I am just getting back into another one of my "Shakespeare phases" and 2016 may be a good year to reading more of Shakespeare. That should keep me busy.

So far, more than 140 Shakespeare-related titles are listed for next year on Amazon.com, including more than 40 in April alone. (The anniversary date is April 23.) “Can you imagine the table at Barnes & Noble ?” said Jonathan Galassi, president and publisher of Farrar, Straus and Giroux, which will release two nonfiction books on Shakespeare next year.

The first, Edward Wilson-Lee’s “Shakespeare in Swahililand,” looks at the impact of the Bard’s works in eastern and central Africa. A second as-yet-untitled entry, by Elaine Scarry, theorizes that Shakespeare’s sonnets were written to another poet—who wrote poems back to him.

The new books come in addition to an already voluminous body of work on the Bard. WorldCat, an online catalog encompassing the collections of some 70,000 libraries in more than 150 countries, lists 182,000 books related to Shakespeare.

Hey, by the way, it is said no other person has more books written about him than Shakespeare (Jesus Christ might be an exception. But answer me this: "Who has probably been the subject of more books than any other American, Lincoln excepted?" The answer will come later.

Among the many articles not related to books or reading was an essay in Saturday's WSJ "Arena," by Daniel Kessler on "The Health of Obamacare." [I remember the first time I used "ObamaCare" in place of the official title of the act and a reader wrote to tell me it was irresponsible of me to call it that, demeaning a very, very act/law. Whatever. Now "everyone" calls it "ObamaCare."]

Another digression. Sorry.

Kessler begins:

More than five years ago, the Affordable Care Act—what most of us call Obamacare—was passed into law with two big declared goals: to reduce the number of Americans who lack health insurance and to cut health spending that doesn’t give good value for money. Has the law been a success? The country is sharply divided. The most recent Gallup and Kaiser Family Foundation tracking polls show public opinion almost evenly split, with Democrats largely supporting the law and Republicans opposing it. This partisan divide in public opinion has changed little since 2009, when President Barack Obama won a narrow victory in Congress for his signature domestic legislation. 

Some data points from the essay / op-ed (I am going through this for the first time; I have not read it yet; I do not know how Kessler stands on ObamaCare, although seeing it in the WSJ provides a  hint:

• the law reduced the number of uninsured from around 45 million (14%) to 35 million (11%), but some (much?) was through expanded Medicaid
• ObamaCare delivers between 20 cents and 40 cents per dollar of expenditure
• the Earned Income Tax Credit delivers around 90 cents of value to its recipients per dollar of expenditure
• given that more than half of ObamaCare's reduction in the number of the uninsured has been from its expansion of Medicaid, this makes the law look more like welfare for the medical-industrial complex than support for the needy
• after two years, the Oregon Medicaid expansion had no significant effects on beneficiaries' physical health, though it did reduce their self-reported financial strain and depression -- New England Journal of Medicine, Boston
• the jury is still out on whether ObamaCare slowed the cost of healthcare, though most have a feeling
• an obscure part of ObamaCare, the "Cadillac tax" on high-cost plans appears to be having a positive effect
• ObamaCare may lay a foundation for future reform
• bottom line: neither the triumph touted by supporters nor the disaster trumpeted by opponents

The downside:

• premiums have not gone down
• many people were not able to keep health plans they liked
• health benefits from expanding coverage have been elusive
• macroeconomic consequences have been negative
• disincentives will reduce the number of hours worked by 1.5% to 2% from 2017 to 2024

And then the author concludes: more is necessary; the question is who will be brave enough to confront difficult policy problems that we still face.

Oh, yes, the answer to the question, the most written about American, Lincoln excepted? George Armstrong Custer.