posted at 19:00
Author Name: Sam Ro
Impact Of Oil Price Shock
In the past, a major oil price shock meant devastation for economic growth. "Our obsession with oil prices comes with good reason," writes Morgan Stanley economist Ellen Zentner. Recent turmoil in Iraq has sent oil prices much higher. "Over time those shocks to the relative price of oil have spurred innovations that have led to a more efficient use of energy inputs," continued Zentner. "Alongside growing use of other energy inputs, those innovations have reduced the world economy's dependence on oil." When gasoline prices rise, drivers tend to reduce mileage in response and/or seek out more fuel efficient vehicles. Technological developments have enabled U.S. oil drillers to extract fossil fuels from shale in North Dakota, Pennsylvania, Texas and elsewhere using unconventional methods. Thanks to the shale boom, we might not even see Middle East-triggered oil price spikes we've seen in past.

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