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Energy Prices and Capital Obsolescence: Evidence from the Oil Embargo Period

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  • Joel C. Gibbons

Abstract

The average service life of fixed assets in U.S. manufacturing industries increased gradually from 1962 to 1969. Thereafter, it fell sharply up to the mid-1970s. The most rapid change occurred in the three years following the Arab oil embargo. There is reason to believe that these events were causally related: the rapid escalation of petroleum prices caused the decline in useful lives of plant and machinery. The reasoning behind this statement and an analysis of the data on service lives of fixed assets are the topic of this paper.

Suggested Citation

  • Joel C. Gibbons, 1984. "Energy Prices and Capital Obsolescence: Evidence from the Oil Embargo Period," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 29-44.
    • Handle: RePEc:aen:journl:1984v05-01-a02
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    Cited by:

    1. Lennox, James A. & Witajewski-Baltvilks, Jan, 2017. "Directed technical change with capital-embodied technologies: Implications for climate policy," Energy Economics, Elsevier, vol. 67(C), pages 400-409.

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    JEL classification:

    • F0 - International Economics - - General

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