Mine K. Yücel

Energy prices and aggregate economic activity: an interpretative survey

In this paper, we survey the theory and evidence linking fluctuations in energy prices to aggregate economic activity. We then briefly examine the implications of this research for both monetary policy and energy policy in response to oil price shocks. Research seems to provide relatively reliable guidance for monetary policy. Because the precise channels through which oil price shocks affect economic activity are only partially known, however, research offers less guidance about how energy policy should cope with oil price shocks.

Oil Price Shocks and U.S. Economic Activity: An International Perspective

Oil price shocks are thought to have played a prominent role in U.S. economic activity. In this paper, we employ Bayesian methods with a dynamic stochastic general equilibrium model of world economic activity to identify the various sources of oil price shocks and economic fluctuation and to assess their effects on U.S. economic activity. We find that changes in oil prices are best understood as endogenous. Oil price shocks in the 1970s and early 1980s and the 2000s reflect differing mixes of shifts in oil supply and demand, and differing sources of oil price shocks have differing effects on economic activity. We also find that U.S. output fluctuations owe mostly to domestic shocks, with productivity shocks contributing to weakness in the 1970s and 1980s and strength in the 2000s.

Protectionist oil policies : A dynamic comparison for the USA

Rising US oil imports have spawned a variety of policies for increasing energy security. We provide a qualitative comparison of policies using a dynamic optimal control model. Thirty-year price and output paths for OPEC and the USA are simulated assuming that US producers are competitive and OPEC is a dominant firm. We find that the policies have quite different effects on imports and welfare. The tariff reduces imports the most, followed by the gasoline tax. A per unit tariff and gasoline tax are costly in terms of US welfare, whereas an ad valorem tariff can both lower imports and enhance US welfare.

The U.S. shale oil boom, the oil export ban, and the economy: A general equilibrium analysis

This paper examines the effects of the U.S. shale oil boom in a two-country DSGE model where countries produce crude oil, refined oil products, and a non-oil good. The model incorporates different types of crude oil that are imperfect substitutes for each other as inputs into the refining sector. The model is calibrated to match oil market and macroeconomic data for the U.S. and the rest of the world (ROW). We investigate the implications of a significant increase in U.S. light crude oil production similar to the shale oil boom. Consistent with the data, our model predicts that light oil prices decline, U.S. imports of light oil fall dramatically, and light oil crowds out the use of medium crude by U.S. refiners. In addition, fuel prices fall and U.S. GDP rises. We then use our model to examine the potential implications of the former U.S. crude oil export ban. The model predicts that the ban was a binding constraint in 2013 through 2015. We find that the distortions introduced by the policy are greatest in the refining sector. Light oil prices become artificially low in the U.S., and U.S. refineries produce inefficiently high amount of refined products, but the impact on refined product prices and GDP are negligible.

The Impact of Changing Energy Prices on the Texas Economy

Energy is fundamental to the Texas economy, although its importance has changed over time. This study examines the relationship between energy prices and the Texas economy. We model the relationship between energy prices and Texas state-level employment, local employment and output across time periods. We find that energy price shocks have varying impacts on employment and output in different periods. The effects of energy price shocks, which had declined since the first oil boom of the 1970s and early 1980s, have become greater in recent years as a result of the shale revolution.

A dynamic model of natural gas deregulation

Abstract This paper analyses the effects of natural gas deregulation in an optimal control framework. The Hotelling type model studies the effects of deregulation on the behaviour of a profit-maximizing competitive producer who explores and produces both new and old gas. We concentrate on the interdependent nature of the extraction and exploration decisions and compute optimal time paths for explanatory effort, extraction and prices. In particular, the natural gas market after January 1985 is analysed. The status quo regime is a regime of partial deregulation with new gas completely deregulated and old gas under price controls. The price of old gas is exogeneously determined by the regulating authority, but the price of new gas is determined endogeneously through the market demand equation. Various schemes of deregulation which fall between the completely unregulated free market case and the status quo case are analyzed and compared to these limiting cases. Losses in consumer surplus and producer surplus are calculated to choose a deregulation scheme that would be least costly to society.