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Democracy & Technology Blog Yergin stumbles into “oil shortage” trap

This morning Daniel Yergin, the famous energy analyst and Pulitzer Prize winning author of The Prize, stumbles into the very trap I warned of several days ago. Writing in The Wall Street Journal, Yergin attributes high oil prices mostly — or even exclusively, as far as I can tell — to political, weather, and technology disruptions around the world, the most recent being that company in Alaska with the Bad Pipes. Yergin even displays a chart of oil prices “Climbing the Wall of Worry,” with the political and weather events superimposed. Trouble is, oil prices had tripled before any of these events happened. As I described in “The Elephant in the Barrel,” these relatively mild supply and demand shocks account for a relatively modest portion of the elevated oil price — maybe $10-$15. The more fundamental cause of high oil prices — accounting for $30+ of the rise — is a weak dollar policy at the Federal Reserve.
– Bret Swanson

Bret Swanson

Bret Swanson is a Senior Fellow at Seattle's Discovery Institute, where he researches technology and economics and contributes to the Disco-Tech blog. He is currently writing a book on the abundance of the world economy, focusing on the Chinese boom and developing a new concept linking economics and information theory. Swanson writes frequently for the editorial page of The Wall Street Journal on topics ranging from broadband communications to monetary policy.