{"id":3253,"date":"2014-12-19T07:05:45","date_gmt":"2014-12-19T12:05:45","guid":{"rendered":"http:\/\/olduvai.ca\/?p=3253"},"modified":"2014-12-19T07:05:45","modified_gmt":"2014-12-19T12:05:45","slug":"cheap-oil-too-much-of-a-good-thing-jaya-bajpai-linkedin","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=3253","title":{"rendered":"Cheap Oil: Too Much Of A Good Thing? | Jaya Bajpai | LinkedIn"},"content":{"rendered":"

Cheap Oil: Too Much Of A Good Thing? | Jaya Bajpai | LinkedIn<\/a>.<\/p>\n

The 40% drop in oil prices over the past 6 months has garnered a lot of attention recently, most of it focused on the economic stimulus lower oil prices should provide the global economy, the impact on currency and fixed-income markets and the increase in economic pain suffered by exporters such as Iran and Russia. In this article, I draw on historical data to assess the potential increase in geopolitical tail risk that lower oil prices may represent. I believe this is an overlooked consequence of lower oil prices that, while low probability, would have an outsize impact on the global economy – a classic “fattening of the tail”. I look at monthly and aggregate data to smooth out daily fluctuations and avoid having us mistake the forest for the trees.<\/p>\n

The data shows that in the 1980s, the most-cited oil price war, the average price of oil dropped from approximately $28\/barrel in 1985 to a low of $11.58\/barrel in July 1986 (US Energy Information Administration data for monthly average front month futures contract price). This would be analogous to a drop from $60\/barrel to $25\/barrel in 2014 prices, using the US Bureau of Labor Statistics CPI calculator. Prices subsequently rebounded almost 60% from that July 1986 low, ranging between $16\/barrel and $20\/barrel for the rest of the 1980s. (There were a few months in that 4 year timespan where the average dropped below $15\/barrel, but I want to focus on the big picture in this article.) Inflation-adjusted to 2014 price levels, oil prices ranged between $29\/barrel and $37\/barrel.<\/p>\n

<\/p>\n

<\/a><\/a>…click on the above link to read the rest of the article…<\/span><\/span><\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Cheap Oil: Too Much Of A Good Thing? | Jaya Bajpai | LinkedIn. The 40% drop in oil prices over the past 6 months has garnered a lot of attention recently, most of it focused on the economic stimulus lower oil prices should provide the global economy, the impact on currency and fixed-income markets and […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[3],"tags":[251,267,1775,600],"class_list":["post-3253","post","type-post","status-publish","format-standard","hentry","category-energy-2","tag-eia","tag-energy-information-administration","tag-oil-price-collapse","tag-opec"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/3253","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3253"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/3253\/revisions"}],"predecessor-version":[{"id":3254,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/3253\/revisions\/3254"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3253"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3253"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3253"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}