{"id":38180,"date":"2018-09-23T17:11:09","date_gmt":"2018-09-23T22:11:09","guid":{"rendered":"http:\/\/olduvai.ca\/?p=38180"},"modified":"2018-09-23T17:11:09","modified_gmt":"2018-09-23T22:11:09","slug":"is-the-oil-burden-a-rising-problem","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=38180","title":{"rendered":"Is The Oil Burden A Rising Problem?"},"content":{"rendered":"
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Is The Oil Burden A Rising Problem?<\/a><\/h3>\n<\/header>\n
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While markets become increasingly bullish, oil prices are close to a \u201cwarning zone\u201d where the barrel could be one -if not the only- catalyst of a major slowdown.<\/p>\n

In my book \u201cEscape from the Central Bank Trap\u201d, I explain the concept of the \u201cOil Burden\u201d. It is the percentage of global GDP spent on buying oil. It is often said that when the oil burden reaches 5-6% of GDP it can be a cause of a global slowdown.<\/p>\n

\"\"<\/p>\n

The mistake that many make is to think that the oil burden is a cause and not a symptom.<\/p>\n

In the past, we have seen that a period of abrupt increases in oil prices was followed by a recession or a crisis. However, not because oil prices rose rapidly, but because the dramatic increase in commodities\u2019 prices was caused by a bubble of credit and excess monetary stimuli.<\/p>\n

In reality, the oil burden is perfectly manageable at 5% of GDP because\u00a0the energy intensity of GDP growth is diminishing. We are less dependent on energy to create growth in the economy.<\/p>\n

Global energy intensity (total energy consumption per unit of GDP) declined by 1.2% in 2017, slightly below its historical yet unstoppable trend (-1.5%\/year on average between 2000 and 2017 and -1.8% in 2016). In fact, global energy intensity is down 54%\u00a0since 1990.<\/p>\n

So the problem is not the oil burden by itself but the cause of the price spike.<\/p>\n

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When oil prices rise abruptly we should be concerned, because they can cause a domino effect on the real economy. When the reason for the price increase is not fundamental, we have a major problem<\/strong>.<\/p>\n

Why are oil prices rising abnormally in recent months?<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Is The Oil Burden A Rising Problem? While markets become increasingly bullish, oil prices are close to a \u201cwarning zone\u201d where the barrel could be one -if not the only- catalyst of a major slowdown. In my book \u201cEscape from the Central Bank Trap\u201d, I explain the concept of the \u201cOil Burden\u201d. It is the […]<\/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":[2],"tags":[16957,506,588,592],"class_list":["post-38180","post","type-post","status-publish","format-standard","hentry","category-economics","tag-daniel-lacalle","tag-markets","tag-oil","tag-oil-price"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38180","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=38180"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38180\/revisions"}],"predecessor-version":[{"id":38181,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38180\/revisions\/38181"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=38180"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=38180"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=38180"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}