De-Globalization? Musing about Oil Prices and Trade Costs

As Glick and Bergin pointed out, transportation costs depend significantly on oil prices. Bergin and Glick note that ocean freight has been rising with oil prices. BLS price indices for air freight suggest the higher oil prices have indeed fed into higher transport costs. Since 1998Q1, nominal oil prices have rise 180% in log terms, while nominal inbound air freight prices have only risen 40%. To the extent that the development of cross border supply chains relied upon low trade costs and rapid transport, higher oil prices should be expected to retard this process. read more

[Tags]costs, oil, prices, freight, price, transport, oil prices[/Tags]

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