tag:blogger.com,1999:blog-13411760.post115267355469964729..comments2007-03-04T20:53:59.444-05:00Nikos Tsafoshttp://www.blogger.com/profile/06437862017180783547noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-13411760.post-1152981504090735422006-07-15T11:38:00.000-05:002006-07-15T11:38:00.000-05:00Daniel, energy efficiency and conservation are hard to capture at this macro scale. A proxy for energy intensity is easy to create but would not illuminate too much, particularly as the data do not go back many years (most of my raw data only go to around 1997-1998). <BR/><BR/>About hedging, I am not sure the effect would be that large. Most firms will only hedge maybe a year ahead, so they will still be buying contracts at higher prices; also, the market is in contango with future prices higher than spot prices meaning that futures contracts provide limited comfort. I am also thinking that the macro effects would probably largely cancel out (I could be wrong on this) since hedges are swap contracts where one party “wins” and one party “loses.” <BR/><BR/>It is true, as Tony writes, that there are other hidden energy costs which are not easy to measure, but I don’t think that diminishes the main idea—after all, most data contain linkages that are hard to measure. For example, it may be that energy prices affect costs of materials, but material costs also affect energy prices. It is not obvious to me how to disaggregate these effects. <BR/><BR/>I am also not sure that “the conclusion misses the point that it is not so much rising energy costs that are the key factor for the future, but the decreasing energy supply, relative to demand.” Prices will ultimately reflect an underlying supply and demand balance. My point here is that we should probability rethink our assumptions about what kind of oil prices we can live with. <BR/><BR/>As for fraudulent CPI data, I can only say one thing: I clicked on the link and it seems that John Williams takes issue with the level of inflation (which he estimates as higher) not its trend (which follows official government data). Using the alternative CPI would do nothing to change the correlation between it and oil prices since all changes in direction and magnitude follow the same pattern as official government data.Nikos Tsafoshttp://www.blogger.com/profile/06437862017180783547noreply@blogger.comtag:blogger.com,1999:blog-13411760.post-1152931482473449532006-07-14T21:44:00.000-05:002006-07-14T21:44:00.000-05:00The official US CPI figures that are used are essentially fraudulent.<BR/><BR/>You can read all about the manipulation of the CPI and other critical indicators at John Williams' web pages: http://www.shadowstats.com/cgi-bin/sgs<BR/><BR/>LawrenceLawrencenoreply@blogger.comtag:blogger.com,1999:blog-13411760.post-1152927186929299462006-07-14T20:33:00.000-05:002006-07-14T20:33:00.000-05:00I don't think energy costs can be broken out this easily. What about the energy costs embedded in the labor, capital, materials and services costs, to companies? When those are taken into account, what is the percentage of a companies costs directly or indirectly attributable to energy?<BR/><BR/>However, the conclusion misses the point that it is not so much rising energy costs that are the key factor for the future, but the decreasing energy supply, relative to demand. It's not clear that that has yet happened to any great degree. When it does, not only are costs likely to sky-rocket (until destruction of demand, i.e. recession) but yearly energy increases will stop.<BR/><BR/>Can we make any kind of adjustment without ample energy?<BR/><BR/>TonyTonyhttp://www.blogger.com/profile/08370857321528322267noreply@blogger.comtag:blogger.com,1999:blog-13411760.post-1152901324682437902006-07-14T13:22:00.000-05:002006-07-14T13:22:00.000-05:00What about contracts and hedge funds that are keeping firms from having to pay the spot prices? How long will the price increases in energy take to negate this effect as contracts expire and have to be re-negotiated?BabyNutcasehttp://community.livejournal.com/peak_oil/noreply@blogger.comtag:blogger.com,1999:blog-13411760.post-1152898241799827792006-07-14T12:30:00.000-05:002006-07-14T12:30:00.000-05:00in Figure 1, what I find startling is that current personal expenditures on oil--even including those high debt levels--is just short of the low-point in the mid 1970s. If credit-financed consumption drops as consumers realize their energy expenditures have risen permanently or for the medium term, they probably will reach those earlier levels. <BR/><BR/>Also, do you have the percentage of energy costs of total input costs for earlier periods? That would make Figure 4 more convincing.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13411760.post-1152896395619848042006-07-14T11:59:00.000-05:002006-07-14T11:59:00.000-05:00What about the roles of energy conservation measures and energy efficiency technology as factors in keeping the energy costs of firms low (i.e., for your second and third points)? Would these effects be large enough to appear at this macro scale?Danielnoreply@blogger.comtag:blogger.com,1999:blog-13411760.post-1152674071760104892006-07-11T22:14:00.000-05:002006-07-11T22:14:00.000-05:00A shorter piece that consolidates the views expressed in three previous posts.Nikos Tsafoshttp://www.blogger.com/profile/06437862017180783547noreply@blogger.com