Monthly Archives: May 2009

Oil Prices on the Rise?

Prompted by an article entitled “Bust and Boom” in the current issue of The Economist, I have decided it is time to dust off a Stubborn Mule staple: the petrol price model. As The Economist notes, following last year’s precipitous fall, oil prices have been climing again over the last few months. The West Texas Intermediate oil price per barrel (bbl) has almost doubled in US dollar terms and, despite a stronger Australian dollar, the price in Austalian dollars is not far behind.


West Texas Intermediate Oil Prices

Rising oil prices may seem odd in a world economy still under the influence of the Global Financial Crisis (aka the GFC), but The Economist points the finger at the collapse in investment in oil exploration and development of new fields. This raises the fear that, while oil inventories are currently in record excess, once these inventories are drained, digging up more oil is getting harder and, consequently more expensive.

So where does this leave Sydney motorists? The simple regression model I have used before is still showing a tight relationship between wholesale oil prices (in this case refined Singapore 97 oil prices) and prices at the bowser. If The Economist’s fears are justified, petrol prices will be reaching $1.30/L very soon and will be headed north from there.Updated Petrol Model

Data source: Bloomberg and the Australian Automobile Association.

Pinching Debt Data

Regular readers of the Mule will know that I am a bit of a data-mining junkie. Whenever I come across an interesting chart I start Googling for the underlying data. But, even with well-honed Google skills, it’s not always possible to find the data. Sometimes it is simply not publically available. I ran into just this problem recently. The recent Australian Federal budget triggered countless alarmist opinion pieces despairing that Australia would be “mired in debt” and this prompted me to do some research of my own. In the process, I came across a handy primer on the subject entitled “A history of public debt in Australia”. Written by a number of Australian Treasury employees in the Budget Policy Division, it included the chart below which shows the history of net Government debt (combining Commonwealth and State debt) over almost 40 years. The chart also includes forecasts for the next few years.

Debt History - Original (v2)

Australian Government Net Debt to Gross Domestic Product

While the paper is clearly quite recent (it has no publication date), the forecasts pre-date those included in the May budget, so I was interested in updating the chart with the latest Treasury forecasts. The underlying data does not appear to be published online and, since I do not work with the authors in the Budget Policy Division, I had to resort to special measures. I turned to a handy (and free, open source) little piece of software I have used a number of times to pinch data from charts. The software is called Engauge Digitizer and it allows you to import an image of a chart and extract the underlying data.

Engauge Digitizer Screenshot

For charts with points or curve segments, Engauge generally does a great job of automatically finding the data. For a column chart like the one I had found, the process is a little bit more manual, but with a bit of clicking on the tips of each of the columns in the image, I had my data. The chart below shows the data I obtained. One indication of the accuracy of the results is that the authors of the history paper noted that net debt had averaged 5.7% of gross domestic product (GDP) since 1970. Satisfyingly, the average of my extracted data over this period was also 5.7%.

Debt History - Imported (v2)Australian Government Net Debt to GDP (imported data)

Having obtained the data, I was then able to replace the forecasts with the more recent Treasury figures included in Budget Paper No. 1.

Debt History - New Forecasts (v2)

Australian Government Net Debt to GDP (updated forecasts)

For the alarmists who are worried about this growing debt, it is useful to put these forecasts in a global perspective. The chart below puts these Treasury forecasts alongside IMF forecasts for a number of other developed countries.

World Debt Forecasts

Global Debt to GDP Forecasts

Compared to the rest of the developed world, the global financial crisis is still not looking quite so scary for Australia. When it comes to the United Kingdom, rating agency Standard and Poor’s is even more pessimistic than the IMF and is concerned that their net debt could reach 100% of GDP and have accordingly changed the credit rating outlook for the UK to negative.

UPDATE: For anyone interested in getting hold of the data without resorting to scraping it from the images, I have uploaded it to Swivel. This dataset includes the most recent Treasury forecasts. Wobbling?

Last year I wrote about the the music/social network combination That post was followed up with one on the demise of muxtape and mixwit in which I said “I hope that does not become the next victim of the RIAA”. While has survived to date, it may only last by significantly changing its laissez-faire approach to streaming music.

A post on their blog last week opens

In the past few weeks we’ve had to make a few difficult decisions that will change the way some things work on  For the majority of you the changes will be for the better, for others they might be less than ideal for the time being.

It goes on to note that music will “primarily” be sourced from the music service imeem rather than broad-based searches of the internet. Users will no longer be able to submit urls pointing to mp3s. Instead, a set of “approved” urls will be used.

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Shoots Are Greener in Australia?

The phrase de jour (or du mois in fact) in financial markets is “green shoots”. Optimists, world equity markets included, are seeing tentative signs of improvement in the world economy. Google trends saw a blip in searches for the phrase green shoots back in January when UK Government minister Baroness Vadera used the phrase and was lampooned for what was perceived as premature optimism. Moving forward a few months and searches have surged again, but this time consensus seems to be far more supportive of a positive outlook.

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