Lovely Rita?

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Well with all due apologies to the beatles Rita isn’t exactly as lovely as she seemed. Now she’s past her prime the insurance companies amongst others are busily counting the cost.

And on top of the obvious comes news that Rita really is number one: according to the FT she “has caused more damage to oil rigs than any other storm in history and will force companies to delay drilling for oil in the US and as far away as the Middle East, initial damage assessments show”.

So just to get things straight: the temporary supply bottleneck just got a little longer (this time my apologies to Ry Cooder) and finding more oil to raise output capacity just got a little harder. I haven’t got an envelope handy, but I don’t think I need to do too many complicated calculations to work out that if this is for real then oil prices can stay higher for longer and global growth will, as a consequence, be just a touch lower.

Meantime Econbrowser James Hamiliton explains why you shouldn’t be counting on getting too much relief from oil shale.

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About Edward Hugh

Edward 'the bonobo' is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

2 thoughts on “Lovely Rita?”

  2. Hamilton isn’t being totally disingenuous, but most of his arguments are aimed against older physical ore extraction technologies and the *last* time they tried to do the oil shale thing. He also downplays just how far along Shell is in its in-situ extraction project, and makes it sound like they’re starting from scratch. Shell’s experiment was started two years ago, and they’re talking about some sort of production on a very small scale early next year. It’s not as gloomy as he paints it from a production point of view.

    Dunno about the environmental aspect. Shell seems to be concentrating on sealing its projects against groundwater pollution, they weren’t talking about emissions from the new technology.

    But it *is* all experimental. Hopes are just that, hopes.