[jato]

Boing! Back up!

PRICE* CHANGE %CHANGE TIME
Nymex Crude $48.44 +2.22 %4.8 14:30

[Annatar]

$this->bbcode_second_pass_quote('k_semler', '')$this->bbcode_second_pass_quote('nero', '')$this->bbcode_second_pass_quote('', 'W')hy does every damn article on oil prices have to mention that factoid? I get really sick of hearing it.

[airstrip1]

If the dollar is going to devalue as far and as fast as everyone is suggesting then the price of oil is going to rise regardless of whether peak production has been reached.

[airstrip1]

Just out of interest is anyone aware of an index for oil prices that is weighted against a basket of world currencies rather than just the dollar ? Given the current volatility of the forex markets it is going to be very difficult to judge the true cost of oil using the current US currency as the benchmark.

[lotrfan55345]

If oil price spikes are only cause by the devaluation of the USD and FOREX, why does OPEC want to reduce the price? Why is OPEC concerned, couldn't they just say oil is rising because the dollar devalued $x ?

[BabyPeanut]

$this->bbcode_second_pass_quote('lowem', 'H')mmm ... they said "limit" instead of "peak".

Is "peak" becoming an unmentionable word?

[airstrip1]

$this->bbcode_second_pass_quote('lotrfan55345', 'I')f oil price spikes are only cause by the devaluation of the USD and FOREX, why does OPEC want to reduce the price? Why is OPEC concerned, couldn't they just say oil is rising because the dollar devalued $x ?

[savethehumans]

And the countdown toward the petroeuro continues....

[frankthetank]

If the Yuan in revalued...likely to happen, if what i read is believeable...wouldn't this cause oil to really gain, considering oil would be cheaper for the Chinese to buy because the Yuan in undervalued?

[BabyPeanut]

$this->bbcode_second_pass_quote('MonteQuest', 'S')ounds an awful lot like peak-oil to me. On MSNBC, no less.

[Oilgood]

It has recently been brought to my attention that a major flaw of the free market system is that it can not possibly reflect the true prices of resources. Here's why:

Future Generations are incapable of making a bid on the market for resources (especially non renewables) due to temporal isolation. Economics often suggests lack of communication and concentration of location for buyers and sellers as one form of market failure. But they only think 3 dimensionally. How can markets reflect true resource prices if future users can not influence the market due to their temporal isolation? If future generations could bid on the present market, resource prices would probably be much higher than they otherwise tend to be.

Is there anyway for the markets to adequately get around this problem and reflect more accurate values for resources? Or does this render the "free market" irreprably flawed in terms of its capacity to distribute resources efficiently?

[trespam]

$this->bbcode_second_pass_quote('Oilgood', '
')
Is there anyway for the markets to adequately get around this problem and reflect more accurate values for resources? Or does this render the "free market" irreprably flawed in terms of its capacity to distribute resources efficiently?

[Oilgood]

So the only way the free market can accurately price resources is by having taxes, regulation ie governement regulation introduced into it. But then it isn't a free market anymore! And dependeing on how accurately you wanted to reflect demands of future generations, the market would need to be extensively regulated.
Another way might be for economic agents to internalize the needs of future generations and be more frugal in their resource use and extraction. But this would:
1) Drive down prices, fueling more demand in the present (kind of like Jeavons' Paradox for consumers as well as producers)
2) Consumers would miss out because a prisoners' dilemma would emerge. Producers who decided to be more conservative would go out of business or be taken over by more ruthless businesses as you implied Trespam.
3) This internalization would run counter the self-interest incentive that is supposed to characteriza economic agents and upon which the whole free market system hinges.

[Oilgood]

Correction to point no 1:

If both producers and consumers were to be more frugal , quantity as well as price would lower and settle at a new equilibrium. But opportunistic consumers and producers would always exists, especially when population growth is factored in, so they would (because of conflicting self-interest) result in near-term resource use expanding once again. Hence the similarity to Jeavons Paradox. Point no 1 is re-inforced by point no 3 (the conflicting self-interest motive of economic agents).

[trespam]

$this->bbcode_second_pass_quote('Oilgood', 'S')o the only way the free market can accurately price [snip]

[Oilgood]

Thanks for the link Trespam. What you seem to be saying is that economic problems are largely caused by the cultural shortcomings of the society (at least in the modern western case). I am inclined to agree. But there also seems to be a positive feedback in our market system, revolving around advertising, such that:

More greed/desire---->more consumption, resource depletion and economic growth-----> more advertising-----> more greed/ desire-----> more consumption etc etc.

How do we break this cycle of insanity? Must we wait for one of Malthus'
"positive checks" to do it for us?

[Oilgood]

It seems the field of economics in its present state is fundamentally incapable of dealing with cultural factors, even though culture has such an important influence on a society's economy.

[Whitecrab]

It could only be done with extreme difficulty. Economics is built on the (reasonable) idea that we would all be happy with more stuff. The only way to do it would be to have strong government intervention, with taxes or quotas being used to control the draw-down of non-renewables. In that way, if a sufficient cost was built in, only people/firms that really need to will use those resources, and they will conserve when they do.

But how do you judge a sufficient tax or quota? What is the right kind of cost to keep things in check? And keep the political will in place to update it even when public will wanes? How can firms plan ahead if the requirements of the government can change unpredictably as science improves? How can one region or country do this without becoming uncompetitve to the world as a whole?


Another idea I could imagine is...right now, we have corporations legally bound to be profit maximizers. We could try to impose some legal "duty of care" to further generations, and let concerned citizens sue over it. But that would probably be a nightmare. An absolute legal nightmare. And judges would probably interpret it based on the social norms of today, meaning they would not take it far enough to be effective.


The last possibility is if we found some way to limit population & economic growth. If our activities were small enough relative to the world's resources, we could probably avoid regulating them too much.

[trespam]

$this->bbcode_second_pass_quote('Whitecrab', '
')The last possibility is if we found some way to limit population & economic growth. If our activities were small enough relative to the world's resources, we could probably avoid regulating them too much.

[Oilgood]

The (economic) problem with child permits is that the rich would be able to buy the most child bearing permits, but rich people also have much larger ecological footprints.