The danger of volatile oil prices
March 19th, 2012
03:00 PM ET

The danger of volatile oil prices

Editor's Note: Michael A. Levi is the Director of the Program on Energy Security and Climate Change at the Council on Foreign Relations where he blogs. This post is part of a CFR Expert Roundup. It is reprinted with permission of the Council on Foreign Relations.

By Michael A. LeviCFR.org

There is a myth, popular among both politicians and the public, that high oil prices are the greatest economic risk that the United States faces when it comes to energy. They're wrong; wildly changing prices, not high ones per se, are what really do damage. Rapidly rising prices drain consumers' wallets without giving them time to adapt; frequent change also makes long-term investments more difficult. People may applaud when prices crash, but to turn a cliché on its head, what goes down must go up.

Policymakers should focus their responses along two dimensions: steps that blunt intolerable volatility and ones that help consumers cope with the consequences of whatever remains.

Some volatility is natural and quite tolerable. Markets aren't perfect predictors of the future, which means that prices will shift to and fro. Since there's no reason to think that governments would be smarter, they usually shouldn't try to override what the markets do. Moreover, modest volatility can prompt consumers to take steps, like shifting to more fuel-efficient cars that will help them if volatility later explodes. FULL POST

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Topics: Economy • Oil • United States
What do high gas prices mean for the 2012 election?
March 7th, 2012
05:00 PM ET

What do high gas prices mean for the 2012 election?

Editor's Note: Michael A. Levi is the Director of the Program on Energy Security and Climate Change at the Council on Foreign Relations where he blogs. This post is reprinted with permission of the Council on Foreign Relations.

By Michael A. LeviCFR.org

Pundits love to talk about how gasoline prices might influence the upcoming presidential election. So it might surprise people to know that political scientists have spent precious little time investigating the relationship between oil and electoral outcomes. The first step in getting our arms around how pain at the pump might play at the ballot box is to pull together some good data.Trevor Houser has done us the favor of delivering just that.

In a new research note published today, Trevor breaks down the gasoline picture state by state, and asks the gas price question three different ways. The first is the obvious one: how do current gas prices vary with political preference? Plotting pump prices against the state-level Partisan Voting Index doesn’t reveal much that’s surprising: blue states see relatively high gasoline prices, red states see lower ones, and purple states are in the middle. When I stare at the chart, though, one interesting thing jumps out. Most purple states have average prices hovering just below four dollars a gallon; if prices rise in the coming months, and the four dollar threshold caries psychological weight, that can’t be good news for the President heading into the summer.

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Topics: 2012 Election • Oil
November 30th, 2011
02:00 AM ET

Durban's U.N. climate stakes

Editor's Note: Michael A. Levi is the Director of the Program on Energy Security and Climate Change at the Council on Foreign Relations. This is his Expert Brief, reprinted with permission of the Council on Foreign Relations.

By Michael A. Levi, CFR.org

On Monday, November 28, diplomats convened in Durban, South Africa, for the seventeenth annual UN climate negotiations, known formally as the Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC).

Those talks, which will last two weeks, are aimed at advancing international efforts to mitigate and adapt to global climate change. The proceedings will involve a mix of technical negotiations aimed at fleshing out and implementing past agreements, and political negotiations focused on elaborating the legal obligations of countries to reduce their greenhouse gas emissions.

The talks will be much lower profile - and involve lower stakes - than the contentious gathering in Copenhagen, Denmark, two years ago. But several important issues are still on the table, and the consequences of decisions made in Durban could linger for many years.

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Topics: Climate • Energy • United Nations
U.S. vs. Europe on climate diplomacy
The sun sets over the sea looking towards Lands End viewed from Gwenver beach near Sennen Cove on February 7, 2011 in Cornwall, England. (Getty Images)
May 20th, 2011
10:08 AM ET

U.S. vs. Europe on climate diplomacy

Editor's Note: Michael A. Levi is the David M. Rubenstein Senior Fellow for Energy and the Environment and Director of the Program on Energy Security and Climate Change at the Council on Foreign Relations where he blogs.

By Michael A. LeviCFR.org

I’m just back from a trip to Europe where, among other things, I talked to people about international climate policy. At one point, I was asked about differences between the United States and Europe in the realm of climate diplomacy.

I observed that the biggest difference was that most Europeans remain focused on concluding a legally binding climate treaty, while most Americans advocates of serious action on climate change are far less attached to that particular outcome.

I noted that one can have strong action without a treaty, and weak action with one, and then offered three hypotheses for why many in Europe remains so treaty-focused: FULL POST

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Topics: Climate
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