Re: a non-Jones theory of oil prices

[Julio Huato <juliohuato@xxxxxxxxxxx>]

Michael Perelman wrote:

> Of course, Mark Jones is ultimately correct.  At some point natural
> conditions will drive up the price of hydrocarbons.  The only question is
> about timing.

My impression is that Mark Jones' argument was about the timing of the
event.  Who would deny that as a resource is depleted, the labor time
required to extract it goes up and that -- one way or another -- that is
reflected on the market price?  Mark's thesis was that we were at the brink
of a Hubbert's precipice.  That this prompted a struggle for control of oil
resources and that this was the best way to understand global politics in
our times.  If he's correct except for the timing, then he's not correct.

Moreover, Mark ruled out a gradual increase in the price.  He emphasized the
steepness of the curve's downward slope, which would lead to a sudden and
devastating rise in the price of oil.  And he claimed that the world economy
would be unable to substitute away from oil via technological change or
input substitution.  He rejected the concepts of demand-and-supply
elasticity and input substitutability as bourgeois ideology.  The only type
of adjustment he envisioned was a sudden and apocalyptic decline in oil
consumption.  It was a doomsday scenario.

This thing about timing reminds me of an awful metaphor used by Gramsci to
characterize Trotsky's theory of permanent revolution:

"Bronstein [Trotsky] in his memoirs recalls being told that his theory had
been proved true... fifteen years later, and replying to the epigram with
another epigram.  In reality his theory, as such, was good neither fifteen
years earlier nor fifteen years later. [...]  It is as if one was to
prophesy that a little four-year-old girl would become a mother, and when at
twenty she did so one said: 'I guessed that she would' -- overlooking the
fact, however, that when she was four years old he had tried to rape the
girl in the belief that she would become a mother even then." (Antonio
Gramsci, Prison Notebooks)

Julio

_________________________________________________________________
¿Cuánto vale tu auto? Tips para mantener tu carro. ¡De todo en MSN Latino
Autos! http://latino.msn.com/autos/