« Menu for New Year's Brunch | Main | Where have all the Marxists gone? » 02 Jan 2008 02:57 pm Oil has hit the long-awaited $100 a barrel. This excites television commentators. I don't find it particularly interesting; we would have reached this point years ago, if we had eight fingers. The fact that oil prices are at a sustained high level is interesting. It is also interesting that so far, this seems to be having little impact on GDP. But the number $100 is not substantially more enlightening than $99.42, the price to which it fell after hitting $100. Comments (19)
Nah -- I bet that if we had 8 fingers, we would have been making a big deal out of $64/barrel oil even more years ago. As long as we can use coal and nuclear for a large fraction of our power needs (and their prices don't change) we should be about to weather any plausible oil price. This seems to be more popular at the margin when the new coal plants are built in China and we import products made using that power. Whether that's the best approach or not, it should get us past at least some of the NIMBY issues which often come up when trying to site new power plants in this country. 
Jane, While the $100 mark is not particuarly interesting, this post included one of the most interesting observations I've seen for a while: "we would have reached this point years ago, if we had eight fingers." It's kind of odd that we have a base 10 system; a base 12 seems so much more practical.
we would have reached this point years ago, if we had eight fingers. That depends on which eight we had. Take the thumbs away and the price of oil becomes much less interesting.
Expanding on my original point, slow lorises have thumbs but only 8 fingers. Does anyone know how they reacted to $64/bbl oil?
"...we would have reached this point years ago, if we had eight fingers" Ron Paul does.
I salute you, fellow dozenalist!
It JUST hit 100.00 a barrel. Isn't it a bit early to saying everything is just fine?
I guess you don't believe in psychology.
"That depends on which eight we had. Take the thumbs away and the price of oil becomes much less interesting." Hah!
Um, you guys have it wrong. If we'd had eight fingers, then, it wouldn't have been $64 (decile) barrel oil that would have gotten us excited, it would've been $51.20 oil, because the dollar would only be worth eighty cents.
"As long as we can use coal and nuclear for a large fraction of our power needs (and their prices don't change) we should be about to weather any plausible oil price." Doesn't that miss the point that oil is by far the best source of transport fuels?
Sanjay - the dollar would only be worth eighty cents. Why not 64 cents?
Have you noticed more cyclists on the road or more people using public transport - if so, its having an impact.
How about more peep dialing up AMZN than driving to TGT ? Also, you should take a poll for date of Au=U$D 1000..
Declining dollar also probably has something to do with it - dollar has declined about 30-40% vs. other currencies. Given that oil is priced in dollars, it would make sense that oil would rise in price.
Re: 1) Overall consumer goods remaining inexpensive because of Chinese imports
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It is also interesting that so far, this seems to be having little impact on GDP.
I agree. My hypothesis: The price increase of oil has been able to be absorbed by a combo of:
1) Overall consumer goods remaining inexpensive because of Chinese imports
2) Spending remaining constant supported by people taking on more debt.
Number one represents mostly a one time benefit that will begin to show diminishing returns as the Chinese market matures and labor costs rise. However, this will still take a few years - or as much as a generation - to reveal itself, as it did in Japan, and the U.S. before that.
Number two is where we will probably start to see reckoning much sooner, as debt is going to be markedly more expensive this year, thus people will start cutting back because there will be no more money from any source.
Posted by Kolohe | January 2, 2008 3:23 PM