Re: RE: Re: Re: gas

[Doug Henwood <dhenwood@xxxxxxxxx>]

David Shemano wrote:

> 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.

Why compare the price oil to other commodities? There's probably a
high degree of correlation among commodity prices, based on the stage
of the business cycle and inflationary expectations. Let's be
Keynesian in spirit and use the wage unit as our measure. In the late
1960s/early 1970s, just before the first embargo, a barrel of oil
cost about an hour's wage (West Texas Intermediate divided by the
average U.S. hourly wage). Almost overnight, it more than doubled, to
around 2.5 hours. After the second embargo, it more than doubled
again, to around 5.5 hours in 1980. It eroded for the next 18 years,
bottoming out at just under an hour in 1998. It's now up to about two
hours.

Tell me how this is rational, and how it's more efficient than human
beings contemplating their energy future dispassionately over the
long term and planning it.

Doug