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Do high oil prices cause recessions? The US economist James Hamilton is famous for his 1983 finding that oil price spikes had preceded all but one post-war US recessions[1]. Hamilton recently claimed that the current recession can be fully accounted for by the high oil prices of 2007-08. But while oil prices are certainly an important macroeconomic variable, it is just not plausible that they have anything like the impact that Hamilton suggests.

Failure is not an option, they say. But Polish veto threats, Italian resistance, and German insistence that it will not jeopardise jobs to help save the planet, suggest that the action plan will be diluted. The risk is the EU will draw withering criticism from climate campaigners and signal weakness and indecision to the US, China, India and other key players in the global warming fight.

Will financial chaos turn America and the world away from environmental concern yet again? Or will refocusing on our energy and environmental problems restructure the way the world does business? We'll know soon enough. Maybe this time, green will help get us out of the red.

An article in today's Washington Post compared the recent rise in oil prices to a $150 billion dollar-per-year tax on the US economy, enough to negate the various economic stimulus plans being discussed by the Congress and White House. It's a shocking figure, and it helps feed the forecasts of recession, which tend to be at least partially self-fulfilling. But before we accept that $150 million figure at face value--despite its impressive pedigree--it's worth spending a moment on a few ballpark validations. Above all, we should remind ourselves that if high oil prices are a tax, they tax producers, not consumers, who rarely purchase crude oil to use in our homes or vehicles.

we put so much focus on new power generation, arguably a more sexy topic when we talk about wind and solar, and seem to forget that maximizing renewable output means improving the way the grid operates and expanding its reach.