Jones, D.W., P.N. Leiby, and I.K. Paik, 2004, “Oil Price Shocks and the Macroeconomy: What Has Been Learned Since 1996?” Energy Policy, Vol. 25, pp. 1–32.
Prust, J., and D. Simard, 2004, “U.S. Energy Policy: Role of Taxation,” U.S. Fiscal Policies and Priorities for Long-Run Sustainability, edited by M. Mühleisen and C. Towe, IMF Occasional Paper No. 227 (Washington: International Monetary Fund).
International Monetary Fund (IMF), 2005, “Recent Developments in Commodity Markets,” World Economic Outlook, Spring (Washington).
Prepared by Sam Ouliaris. This note has benefited from comments by Ravi Balakrishnan, Kornélia Krajnyák, and Martin Mühleisen.
The actual first-round impact is likely to be moderated by rising U.S. exports to oil exporting nations.
Early 2003 future curves for crude oil, which extended to 2008, failed to predict subsequent price increases. Also, the surge in global crude oil consumption was particularly evident in 2004, stemming from growth in the United States, China, and India.
It is well-documented, however, that crude oil futures price curves are poor predictors of future spot prices (e.g., IMF, 2005, pp. 64–68).
For example, recent efforts to replace the Methyl tertiary butyl ether (MTBE) additive in gasoline with ethanol have been hampered by high refinery utilization rates in the United States, raising gasoline prices relative to the underlying price of crude oil.
A proposal to allow the Administration to tighten Corporate Average Fuel Economy without Congressional approval is presently being considered by the House of Representatives.