The Unassuming Economist

Oil prices are likely to remain high for the foreseeable future, and IMF economists say that governments should be looking to back sustainable alternative sources of energy. IMF analysis released as part of its World Economic Outlook says improvements in oil supply have been slow.

As the price of oil broke through $100 a barrel recently, economists have started whispering the dreaded R word – recession. The last five oil shocks – 1973-74 Arab oil embargo; 1978-79 Iranian Revolution; 1980s Iran-Iraq war; 1990-91 Gulf War and the oil spike of 2007-08 – all triggered global recessions. To continue reading, see the recent article by China Daily.

Improvements in energy diversification for OECD nations – a key determinant of energy security – are mostly attributable to the increased importance of natural gas as an energy source, a recent IMF working paper reveals. To read more, see the commercial climate’s Blog article on the paper.

From today’s New York Times — “The record of failure to predict recessions is virtually unblemished,” wrote IMF economist Prakash Loungani in one of many papers demonstrating the near-universal truth that economists’ predictions are least accurate when they are most needed. Read the rest of the New York Times excerpt of this new book on the dismal record of economic forecasting by Dan Gardner.

World oil prices are back above $100 a barrel, more than double levels two years ago, but increased diversification of energy supplies has given many economies greater resilience to price fluctuations. However, countries remain vulnerable to supply disruptions and extreme oil price volatility. To continue reading, see the IMF Survey piece on the rising oil prices.