Re: RE: Re: RE: Re: Re: gas

[Doug Henwood <dhenwood@xxxxxxxxx>]

Mark Jones wrote:

> Doug Henwood 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,

I didn't write that. David Shemano did.

> I
> already reposted a citation by Michael Perelman showing something quite
> different.
>
> >  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.
>
> Why trap ourselves like this? First of all, the posted WTI price doesn't
> tell us much about the real price of oil.

No. But it's a more or less consistent series over time.

>  For that you'd have to take other
> things into account,  including various cross-subsidies such as the
> geopolitical costs funded by the taxpayer of control of the sealanes, which
> some estimate now double the spot price.

Did that change much between 1980 and 2001? 1998 and 2001?

>  Second, the argument from wages
> (whose wages, btw?)

The average private sector wage in the U.S., like I said.

>  is circular. Third, sterilising the discussion from
> contact with the real world by locking it into price-theory circularity
> ignores the momentous events which have been happening in the *fundamentals*
> including the rise and decline of offshore, the rapid decline of N America
> oil and gas production, the collapse of the Soviet oil and energy industry,
> and the highly dubious reassessment of reserves by OPEC states. Fourth,
> without analysing the environmental and social externalities of oil, the
> argument doesn't connect with urgent political issues. Without taking these
> and other concrete historical factors into account, the discussion can yield
> scant results even in your own stated keynesian terms.

Uh, Mark, are you a wind-up toy? The point I was trying to make was
that all the gyrations in the market price of oil over the last 30
years have been largely meaningless, completely unconnected to
underlying fundamentals, and a nice refutation of Hayekian price
theory. That may not be the point you want to make, but I'm not you,
and I have no desire to be.

Doug