RE: Re: Re: gas

["David Shemano" <dshemano@xxxxxxxxxx>]

Doug Henwood wrote:

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>We have to be careful to distinguish short run from long run phenomena
>here.  Prices are not a good indication of scarcity.

No they're not, though Mark seemed to be treating them as such. The
gyrations in oil prices over the last 30 years, from $10 to $40 a
barrel, have made little economic sense - the fundamentals haven't
changed (oil is a finite resource, though opinions differ on how
finite, and if we burn too much more of it, we'll choke). Looks like
this should be a real problem for the Hayekians: what signal is there
amidst all this noise?

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You have to figure in the constant monetary inflation/deflation experienced
since Nixon severed the dollar's link to gold.  I'll bet that if you
compared the price of oil over the past thirty to other commodities, you
would find that the price of oil has not changed much relative to other
commodities.  Remember, prior to 1971, when Nixon severed the link, there
was little price gyration in oil (or other commodities generally) remotely
comparable to what occurred after 1971.

David Shemano