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
