The Oil Drum: Why Oil (and Helium) are Still Underpriced

Economists often like to argue that the prices set by markets are simply right. In this way of thinking, it doesn’t make sense to ever say that oil is ever overpriced or underpriced. The problem with this for human civilization is that capitalism is an optimization method that finds optimal behavior a short time into the future. Unfortunately, as we all witness the slow depletion of an obviously finite resource absolutely central to the operation of modern human industrial society, it is obvious to many that we need to pursue strategies that might not have an immediate payoff. Optimizing for results with a longer look-ahead window isn’t rocket science, and it isn’t unprecedented. The whole field of molecular biology was founded by decades of research paid for by taxes with no immediate payoff in sight. Capitalism had nothing to do with it.
more after the jump at The Oil Drum.