The Oil Bubble Controversy, Revisited
One of the curious things about economic debate in the later Bush years was the conviction among many on the right that there wasn’t a bubble in housing, but that there was one in oil.
We now know the truth about housing. But what about oil?
Oil prices did spike to triple-digit levels in early 2008, then drop sharply. But think about the fact that right now, with the world economy still seriously depressed, oil is at $80 a barrel. This suggests to me that high oil prices are largely caused by fundamentals.
And it also suggests that resource constraints will be an issue if and when we do get a full recovery.
Energy expenditures as a percentage of PCE
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During the early stages of the pandemic, energy expenditures as a
percentage of PCE hit an all-time low of 3.3% of PCE. Then energy
expenditures increased ...
2 hours ago
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