Emily McConville | February 2, 2018
The U.S. government has a good idea of where oil prices are headed and why, said Associate Professor of Economics Christiane Baumeister. But the demand side — how much energy people will buy at a given price — is less clear.
So the U.S. Energy Information Administration (EIA), a part of the Department of Energy that collects and distributes data on energy and the economy, recruited Baumeister to develop an indicator for future energy demand.
With a two-year, $120,000 grant, she’ll collect data on possible determinants of oil demand and create models to figure out which of those factors actually determine future demand. Having that information, she said, tells us about more than just oil.
“Energy is one basic resource on which our economy thrives,” Baumeister said. “We need energy for any type of economic activity, for daily life. It’s a big factor in how well the economy is doing.”
Baumeister, who joined the Notre Dame faculty in 2015, has studied energy markets and prices throughout her career. She specialized in oil markets as a principal researcher in the Bank of Canada’s International Economic Analysis Department, and she has collaborated with the EIA on studying oil prices.
Previous work on oil price fluctuations, Baumeister said, relied on conventional indicators — dry cargo freight rates, prices of industrial commodities, or steel production — to determine demand.
“The shortcoming of all these indicators is that they might be too narrow in scope since they are all based on a single category of variables,” she said. “The question my project tries to answer is whether we can improve upon existing indicators by combining information from a variety of data types. The goal is to be more comprehensive and consider all possible determinants of energy demand together in order to develop a novel indicator.”