[Marxism] More liberal wisdom on oil
bauerly at yorku.ca
bauerly at yorku.ca
Sat Jun 28 08:02:27 MDT 2008
Yes, there is no futures trading in iron ore but there is in steel and other
metals made from iron ore. Furthermore, the idea that because there is a
genuine shortage in iron ore, which I am not saying there is, does not mean
that oil prices are based on fundamentals.
Krugman- "This suggests that growing demand from emerging economies,
not speculation, is the real story behind rising prices of raw
materials, oil included."
This is a rediculus argument. Is he claiming that demand for iron in China
increased enough to account for the 92% increase in the last month or that
demand for oil has increased so fast as to create the five fold price increase
since 2004 (and jumped from $60 in early 2007 to $140 a barrel in 2008, or $8
in 1998)? Or, does Krugman think that the price in 2004 and 2007 did not
reflect fundamentals? Either way, it shows that the oil market is anything but
the result of supply and demand.
[A side note- I just read one source who claims that the Saudi's are
anticipating CO2 reduction and increased CAFE standards and are attempting to
make hay while the sun shines rather than letting regulation and rent seeking
carbon trading increase the price, and cut into their profits, through carbon
This seemed to me to be counterlogical, as any increase in oil prices would only
act to make alternatives more competitive. Unless, the cartel intended to make
the oil market volitile. A sharp increase now gets everyone screaming peak oil
and lets get going on those electric cars. If this is followed by a sharp
decline in prices, oh no, stupid tree huggers and thier crazy dope smoking
inspired ecological limits.
(side not to side not- Or, the investment in alternatives is where the cartel
sees the real future profits to invest its windfall oil profits)]
None of this takes into consideration the role of monetary policy, which plays a
very large role in this spike also.
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