Will higher fuel prices hurt you significantly?

Apparently, Gingrich sees lower fuel prices as his ticket to the White House. You can vote in today's pole as to whether higher fuel prices will hurt you significantly. (HT: The Daily Beast). Of course, it doesn't matter if they would hurt you significantly; your current low fuel prices are basically a plundering of the poor by the relatively rich (and if you are reading this, you are relatively rich). And if the nice Mr Gingrich lowers your fuel bill even more, it is a lot less free than you think.

The Oil Curse: How Petroleum Wealth Shapes the Development of Nations

I just attended a presentation by Micheal L Ross on his book: The Oil Curse: How Petroleum Wealth Shapes the Development of Nations. I learnt a some very interesting things in a short time that thought I would share whilst wolfing down my lunch*.

-- Oil countries have higher birth rates and lower female participation rates in the labour force. Possibly due to the fact that Dutch Disease kills sectors in which women tend to participate, such as the export manufacturing and agriculture sectors.

-- Oil-producers have considerably less open budgeting processes than non-oil producers.

-- Since the end of the cold war there has been a significant reduction in the number of civil wars in countries. But this reduction comes entirely from non-oil producing countries.

--The number of democracies has increased significantly since the end of the cold war but this is entirely in non-oil producing countries.

-- The oil curse only started to appear following the price hikes/wave of nationalisations that occurred in the 1970s. Prior to this, oil producing countries were no more likely to have a civil war, no more likely to be a dictatorship and their budgets were as transparent as other countries.

-- Countries with only off-shore oil are significantly less likely to have a civil war than countries with some on-shore oil - in fact they are about as likely as non-oil producers to have a civil war. This suggests that tribal, ethnic, regional tensions are exacerbated if those in oil-producing regions do not feel they get their fair share and the ability of fighters for these causes can use oil to prolong fighting. 

-- There are currently only about five major oil producers in sub-Saharan Africa but this is likely to double or even triple by 2050 as more exploration is done on the continent, as oil demand increases, supply runs out elsewhere and the resulting price increases make it viable to produce in the region. This makes it important to try to address some of these issues.

So, you see, oil isn't all good.

*A part of the 'Insights into the exciting lives of economists' series

Brazilian ethanol finally allowed into the US

American ethanol uses to much energy to produce it is probably no greener than petrol. Not only that but it displaces food production pushing up food prices. Alternatively, it requires using land that could be used to grow trees. American ethanol production uses billions in subsidies. Funds that could be used for health or education or transport or the environment or lower taxes for businesses and workers. Anything. I came to the conclusion some time ago that it only exists because of the power of the corn lobby. On the few occasions that I fill up a car in the US, I deliberately avoid the mixed petrol-ethanol on offer. I reckon it is probably less green than pure petrol.

Brazilian ethanol takes less energy to produce (even including transport), uses less land per litre to produce, is cheaper and more efficient. Finally, in the current climate of cut-backs, it can't be justified not to allow it to compete with the US variety. It should result in a large reduction of ethanol being produced in the US. Brazil's economy should grow faster lifting more people out of poverty and the American consumer can have cheaper and greener fuel for their cars. The subsidies should go, the land used for food or forest. The world will be a greener place. And, I can fill up cars with ethanol. Oh, but the small vested interests of the corn-lobby in the US which produces inefficient American ethanol due to the utterly crazy subsidy scheme will lose out. All thanks to the fact that Brazilian ethanol is finally allowed into the US.