Thursday, December 11, 2008

More on $1 a Gallon



I'm a little surprised to see the idea of deflation rearing it's ugly head when the government and the fed are doing quite a bit to prop up the dollar and keep the current Ponzi scheme afloat. They don't win except via inflation, so they will use the related ideas of deflation and high unemployment to justify inflation creation.

Here is a funny idea about oil:
Oil is just a commodity like any other. There's nothing special about oil except for the way our society has been purposefully engineered to be dependent upon it and the fact that plastics can be made from it.

I like plastics. They have their uses. I like the idea of conserving oil for use in the creation of plastics. Yup, call me crazy...

I don't like the idea of oil as fuel when there are so many other things we could use instead. Now maybe it could be said that we needed oil as fuel until now, but we are rapidly approaching an era of technologies when the continued use of oil as a primary fuel will be a choice and not a necessity.

So, doesn't it seem reasonable that the price of oil is dropping? If there is a built-in surcharge in other products that accounts for what is largely a hidden gas cost then those items will also drop in price. That makes perfect sense.

Not so long ago gas was only about $1.50 USD - the fact that it jumped to nearly $4 USD on speculation was just part of the vagaries of a speculator market. It's not a market I think should exist, but I'm not in charge. So speculators were able to make out like bandits and put the screws to everyone else internationally. That's what happened.

But the drop of gas prices from $4 USD (record high oil barrel prices of near $150 USD) back down to something more reasonable is not really deflation. I'd call it more of a market correction and a step back from a purely speculator driven trend.

Think of it as haggling on a much larger scale.

Necessary Monty Python link: