This article where it talks about oil hitting $104 per barrel is a little old, given that, as of this posting, oil has hit $108.32 per barrel. The previous record (adjusted for inflation) was $103.76 per barrel. What struck me most is the actual price - $39.50 per barrel in 1980! That's a rate of 171.31% over 28 years. While the price of oil is high, the inflation rate is further proof that we must get our economy under control.
Tuesday, March 11, 2008
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2 comments:
That's what I've been saying for a while now. Yes, oil probably does fluctuate in value somewhat, but much of the sudden high cost is due to the dollar being so weak. Same is true with gold. If you want to know how much a currency is worth, check how much gold it can buy, because really, gold doesn't change, just what is it being valued by.
Nick,
Technically, Gold's valuable is not fixed either. It is simply less volatile than currency based on "faith in the USA government". Laws of supply and demand are operative even with precious metals, as proven by how tightly Debeers controls shipments of diamonds to keep their prices high.
I think a larger problem at the moment is a lack of refining capability. OPEC continues to refuse to open the spigots. Part of the reason is certainly their high profits. But another is the fact that even if they dumped another million barrells on the market, there is nowhere left to refine them into gasoline. The USA needs to face this fact and allow petroleum companies to start building refineries again.
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