Sustainable Transportation Energy Pathways (STEPS)
El-Gamal, Mahmoud Amin and Amy Myers Jaffe (2008) The Global Energy Market: Comprehensive Strategies to Meet Geopolitical and Financial Risks - Energy, Financial Contagion, and the Dollar. James A Baker III Institute for Public Policy
Most commentary on the current credit crisis in the U.S. and global markets has focused on the role of China and other Asian creditors of the United States. In this paper, we focus on the effects of high oil prices on resurgent petrodollar flows, which have contributed to current economic conditions, including rising inflation levels worldwide, very similar to the ones prevailing in the 1970s. Unsustainable levels of U.S. debt, the magnitude of the current credit crisis, and the political and economic difficulty of raising interest rates to reverse those trends, suggest that the global economic and financial system is heading toward a new paradigm. Orderly and smooth transition from the current Dollar, debt, and oil-based paradigm is more desirable than its likely crisis-driven alternative.