MorganEnergy

Even in these environmentally-conscious times it takes a brave man to suggest that Californians should pay more for their gasoline, yet that is exactly what Severin Borenstein of UCEI Berkeley will do next week. He does, however, have a get-out clause: he wants the tax surcharge inversely indexed to the price of oil. Here’s the abstract of his paper:

California is faced with an unprecedented budget crisis. The state is also committed to significant reductions in greenhouse gases that cause climate change. Meanwhile, the price of gasoline is plunging as the world economic slowdown cuts oil demand. At the intersection of these three situations lies an opportunity. I analyze the effects of a transportation fuel surcharge that moves inversely to the price of oil. Such a surcharge could stabilize gasoline prices at levels that a few months ago would have been celebrated by consumers and still significantly reduce California’s budget deficit. It would also slow the return of gas-guzzling vehicles that will otherwise result if oil prices remain at current levels.

If you would like to see him make the point to the public, he will be at the Hyatt Regency Hotel, Regency F, 1209 L Street, Sacramento from 4:00pm to 5:30pm on Wednesday, December 3rd. Some of us, however, will be at or on our way to New Orleans.

Most of us who work in energy economics have had dealings with government regulators at some point or other during our careers. Mostly, in my experience, such people have taken their jobs very seriously. Obviously I have led a very sheltered existence.

UCEI has a new paper available online. “Understanding Crude Oil Prices” by James D. Hamilton looks at the causes of oil price rises. The abstract sounds quite interesting:

This paper examines the factors responsible for changes in crude oil prices. The paper reviews the statistical behavior of oil prices, relates these to the predictions of theory, and looks in detail at key features of petroleum demand and supply. Topics discussed include the role of commodity speculation, OPEC, and resource depletion. The paper concludes that although scarcity rent made a negligible contribution to the price of oil in 1997, it may be an important feature of the most recent data.