The finding of Chinn, LeBlanc, and Coibion (2001) that futures prices are unbiased predictors of future spot prices argues against a large risk premium. Estimates by the Board’s staff, based on the methods of Pindyck (2001), indicate that the risk premium in oil futures was no more than $ or so even during the recent spikes in prices.
12  Japan may set an unreasonably high standard: That country’s small area reduces the use of energy for transportation, and the low average size of homes on these densely populated islands reduces heating and cooling costs. Japan also produces a different mix of goods and services than the United States, a mix that may be less energy-intensive.