Who’s afraid of peak oil?

With ever-growing attention to the peak oil question, it’s worth observing yet again that the U.S. economy has been astonishingly resilient to the high price of oil. Indeed, if I’m reading this chart correctly, the real price of oil has tripled in the last four years — easily the highest percentage increase in such a ...

By , a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and co-host of the Space the Nation podcast.

With ever-growing attention to the peak oil question, it's worth observing yet again that the U.S. economy has been astonishingly resilient to the high price of oil. Indeed, if I'm reading this chart correctly, the real price of oil has tripled in the last four years -- easily the highest percentage increase in such a short span of time. Last year I wondered if $70 a barrel for oil would have stagflationary effects -- and the answer so far appears to be no. Raphael Minder reports in the Financial Times that the global economy could be just as resilient: The world economy will not face a serious inflation problem even if there is a further significant increase in the price of oil, the governor of the Reserve Bank of Australia said on Thursday. Ian Macfarlane, whose 10-year tenure makes him one of the world?s longest serving central bank chiefs, said in an interview with the Financial Times that he expected inflation to remain under control even if oil rose above its recent peak of nearly $80 a barrel. ?There is of course a lot of anxiety about oil and a lot of attention given to the issue worldwide. But what I find most relevant is that we have been able to absorb the increase in oil prices reasonably well, in a way nobody would have predicted two or three years ago.? ?We have got from $20 to $77, so if we were to go to $90, and people are saying that then all hell is going to break loose, I really doubt it,? said Mr Macfarlane, who steps down next month.

With ever-growing attention to the peak oil question, it’s worth observing yet again that the U.S. economy has been astonishingly resilient to the high price of oil. Indeed, if I’m reading this chart correctly, the real price of oil has tripled in the last four years — easily the highest percentage increase in such a short span of time. Last year I wondered if $70 a barrel for oil would have stagflationary effects — and the answer so far appears to be no. Raphael Minder reports in the Financial Times that the global economy could be just as resilient:

The world economy will not face a serious inflation problem even if there is a further significant increase in the price of oil, the governor of the Reserve Bank of Australia said on Thursday. Ian Macfarlane, whose 10-year tenure makes him one of the world?s longest serving central bank chiefs, said in an interview with the Financial Times that he expected inflation to remain under control even if oil rose above its recent peak of nearly $80 a barrel. ?There is of course a lot of anxiety about oil and a lot of attention given to the issue worldwide. But what I find most relevant is that we have been able to absorb the increase in oil prices reasonably well, in a way nobody would have predicted two or three years ago.? ?We have got from $20 to $77, so if we were to go to $90, and people are saying that then all hell is going to break loose, I really doubt it,? said Mr Macfarlane, who steps down next month.

Daniel W. Drezner is a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and co-host of the Space the Nation podcast. Twitter: @dandrezner

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