Are Oil Price Declines Good for the Economy?

Kevin L. Kliesen
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Abstract

S ince mid-June, the spot price of the U.S. benchmark for crude oil, West Texas Intermediate (WTI), has fallen from a bit less than $108 per barrel to a bit less than $50 per barrel—a decline of more than 50 percent. Much of the economic research on the effects of crude oil prices on the macroeconomy has focused on the effects of rising oil prices: Sharp increases generally have a negative effect. In fact, oil price increases have preceded 10 of the past 11 U.S. recessions.1 But do falling oil prices, overall, have positive effects on the macroeconomy? Here the research is less conclusive: Some researchers argue they don’t and some argue they do.2 In general, though, as with rising oil prices, the effects depend on the source of the shock affecting the supply or demand. Falling oil prices have numerous effects—some positive and some negative. On the positive side, lower oil prices tend to lower overall inflation and, to some extent, mea sures of inflation expectations. All else equal, lower inflation and inflation expectations tend to lower nominal interest rates and may spur increased demand for interestsensitive durable goods such as automobiles and housing. Lower oil prices also help to reduce operating expenses of the transportation sector and other industries that are relatively large users of gasoline, diesel, and jet fuel. There is also evidence that lower oil price volatility is associated with increased capital expenditures by businesses. On the negative side, lower oil prices reduce the extraction and drilling incentive for producers, which has become more important in recent years since the United States has become a large crude oil producer. Reduced drilling activity has an immediate effect on industrial production and, ultimately, on nonresidential fixed investment.3 Although drilling activity remained high for a few months after oil prices peaked and began to decline, the number of rotary rigs drilling for crude oil in the United States has declined by about 23.3 percent since mid-October 2014.4 The table provides a gauge of the economic effects of falling crude oil prices, showing the average peak-to-trough change in oil prices and various measures of economic activity for five non-recession episodes since 1983. The five episodes and their respective peak-to-trough decline in oil prices (in parentheses) are November 1985–July 1986 Are Oil Price Declines Good for the Economy?
油价下跌对经济有利吗?
自6月中旬以来,美国基准原油西德克萨斯中质原油(WTI)的现货价格从每桶不到108美元跌至每桶不到50美元,跌幅超过50%。许多关于原油价格对宏观经济影响的经济研究都集中在油价上涨的影响上:油价大幅上涨通常会产生负面影响。事实上,美国过去11次经济衰退中,有10次是在油价上涨之前发生的但总体而言,油价下跌对宏观经济有积极影响吗?这方面的研究没有那么确凿:一些研究人员认为他们没有,一些研究人员认为他们有不过,总的来说,就像油价上涨一样,其影响取决于影响供应或需求的冲击来源。油价下跌有许多影响,有些是正面的,有些是负面的。从积极的方面来看,油价下跌往往会降低整体通胀,在某种程度上,也意味着通胀预期的降低。在其他条件相同的情况下,较低的通胀和通胀预期往往会降低名义利率,并可能刺激对汽车和住房等对利率敏感的耐用品的需求增加。低油价还有助于减少运输部门和其他使用汽油、柴油和航空燃料相对较多的行业的运营费用。还有证据表明,油价波动的降低与企业资本支出的增加有关。从消极的方面来看,油价下跌降低了生产商开采和钻探的动力,近年来,由于美国已成为一个大型原油生产国,这一点变得更加重要。钻探活动的减少会对工业生产产生直接影响,并最终对非住宅固定投资产生影响尽管在油价见顶并开始下跌后的几个月里,钻井活动仍保持在高位,但自2014年10月中旬以来,美国用于开采原油的旋转钻机数量下降了约23.3%。该表显示了原油价格下跌对经济的影响,显示了自1983年以来五次非衰退时期油价从高峰到低谷的平均变化以及各种经济活动指标。1985年11月至1986年7月,这五个时期以及它们各自的油价从高峰到谷底的下跌(括号内)是:油价下跌对经济有利吗?
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