Environmental Economics: That was fun, it made me feel like a real economist (the kind who might have something interesting to say at a cocktail party)

February 03, 2015

That was fun, it made me feel like a real economist (the kind who might have something interesting to say at a cocktail party)

From the inbox:

My name is [name], and I am a reporter with the [paper] in [place]. I am working on a story about the low gas prices, and have been interviewing businesses and individuals about impact, etc. I also wanted to talk to an economist, or economics professor, from ASU to give me some expert opinions on how long the low prices are sustainable, why they are so low in laymen's terms, and what the long-range prediction is, based on your expertise.

Feel free to e-mail me your response with any quotes you want to throw in. However, if you wish to respond my phone, my digits are [number].

I look forward to hearing from you soon!

Thanks, [initials]

My reply:

[name],

It has all been demand and supply. The shale oil boom has increased world oil supply. Production in North American [sic] has increased by about 33% and world oil production has increased by 5% since 2010. But the larger factor has been demand. There has been a decrease in global oil demand as world GDP growth rates have fallen from 4% to 2% over the past four years. I expect low prices into 2016.

Hope this helps!

John Whitehead

P.S. Here are some links:

Production (EIA): International Energy Statistics
Consumption and Prices (EIA): What drives crude oil prices?
GDP growth: World Bank