As oil surged towards $80 a barrel last year, people worried about whether the world economy could cope. The oil shock, along with the US housing crash, was among the reasons cited by Nouriel Roubini of New York University here on his blog (some content requires subscription) and in a piece for the FT, arguing that a US recession was coming.

Now Lutz Kilian of the University of Michigan has shed interesting light on the debate. He argues in a recent paper that not all oil shocks are alike. Oil price surges are more often a result of demand-side factors, such as a strong world economy or precautionary stock-building, than of supply-side disruption. In particular, the run-up in prices this decade has been largely caused by strong global growth.

As James D.Hamilton of the University of California at San Diego, observes on his blog, one implication is that the real threat posed by the latest oil price surge has not been a recession, but higher inflation.

The US housing crash, however, may be another story….

Mexico’s giant Cantarell oil field has been in the international news and on blogs a lot lately. The Mexican press has been especially vocal about the fate of the world’s second largest field that generates much of the country’s income. The latest story in the WSJ (subscription required) gives a detailed account of its history and its struggles to maintain its vast production. 

Royal Dutch Shell says it should be able to resume full oil production from Nigeria within 5-6 months after coming to an agreement with the Niger Delta rebel group that has been sabotaging its operations for more than a year, the New York Times reports from Lagos. Adding 500,000 barrels of oil a day is good news for Shell as well as consumers, but it will mean the Opec oil cartel may have to compensate with further cuts to ensure prices stay around $60 a barrel. That is, of course, if Shell’s optimism is proved well placed in one of the most unpredictable countries in the world.