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Oil and vinegar

By Owen Paine on Wednesday June 25, 2008 10:18 PM

I've spent the last few weeks trying to figure out if any one has a useable notion of what makes crude oil prices happen as they do. Interim answer: No.

One chap in public torment over this is our old friend and Bush-basher the ever-beaverish merit badger Paul of Princeton. The Krug-man cometh and goeth on this one -- in fact over and over again he cometh and goeth.

Here's a recent such effort:


In this one, he sez twice he ain't got "no dog in the hunt". And nope, he doesn't. But he sure gets himself into a fix as he tries to rationalize what appears to be monstrous, and in the process looks like a man chasing a greased pig -- across an iced-over pond.

Krug believes by all thats logical and Marshallian and taught at MIT that this huge price soar ain't from tampering, ain't from the dark arts of the corporates and fundsters at work. Can't be! He's Dr Pangloss without even knowing it. All's well that ends well in the best of all corporate markets

Oh hell, why do I bother to lampoon the Paulmeister? The truth is, nobody with a PhD in economics has a decent model of pricing -- for oil or electricity or corn or interest rates or doctors' fees or anything, really, other than abstract widgets. Nobody understands prices in the world we all actually live in.

But one doesn't have to be an Ivy-trained Marxian attack economist to have one's suspicions. Don't we all, if we're not drunk on conventional wisdom? Any fool can see something ain't quite right, eh?

So how do guys like Paul get to where it's all "spontaneous and to be expected maybe grim but natural and transitory and on the yellow brick road and blah blah blah"? Unless it's demonstrated to be the exclusive doings of the Other Team, aka the GOP, Paul's standing up for the orthodox tower troll calmative -- which is? In the long run we'll all eat cake.

That brings me to the other classy set of smug hand-sitters, you green-aholics -- you shits just love these higher prices -- am I right?

For obvious reasons, I suppose -- you don't so much care who's pocketing the windfalls, like I do, just so long as the sky high pump charges reduce hoi polloi's consumption -- right? I mean down the road when Mr and Mrs Below Average IQ buy the next four wheeled planet stinker.

Yaah, great! Thousand dollar oil with 980 dollar profits! Lets give our blessed mother planet and her exiguous dime-thin atmosphere a chance to recoup its life-sustaining freshness.


Comments (8)


Got me dead to rights, OP. As it happens, I just now had to take a long but quick two-day trip to the wilds of rural Maine -- we went through Biddeford twice, you'll be delighted to hear -- and the modest family Subaru station wagon drank up about $150 worth of gas
to do it. Normally I don't like spending money, but each time I saw these $50 tabs on a fill-up, I laughed like a fiend. If the trans-nats, God bless 'em, can keep this up for a while, we're gonna see some changes.

Son of Uncle Sam:

In 1998 gas went from 1$ to 1.20 it was a big deal at the time. Now I admit $4.00 is abnormal but so is anti-matter, copper, ect ect but add the same twenty percent, $4.80 has a nice ring to it no. There's alot to be said on the topic but in short, we have to buy it, so why not pay more? I could go into the lame your coffee cost 2.30 for 20 oz but even I can't stomach that shit.
MJS, don't be afraid to expiriment w/ the octane. And when you floor the trottle in that wagon, you're gonna know where that extra money went. Especially if you up grade to a buick roadmaster, more cylinders, more octane.

That brings me to the other classy set of smug hand-sitters, you green-aholics -- you shits just love these higher prices -- am I right?

When you're right, you're right.

But then, you're usually right.


any one interested in the feeble
marshall crosses
dearest paul
brandishes at these oil vamps
here's a fink link



I'd hoped for the free market user fee solution, a $5/gallon tax where the revenue is devoted to subsidies for fuel efficiency and expansion of renewable energy sources.

This will do. If we try to blow up Iran soon, it might even exceed my modest expectations.


actually multinational monitor had a decent analysis i thought:



i would be happy making oil a public utility like nader is now suggesting and gradually making it prohibitively expensive to buy gas (starting immediately with SUVs) while building mass transit systems and bike lanes. turn the national highway system out to pasture and let ecological succession do it's work...


krug update

"we won’t have even the beginnings of a rational energy policy if we listen to people who assure us that we can just wish high oil prices away" recentest column by krug

krug despite his claims other wise does have a dog in the fight eh??

a green dog not pink
or red white and blue
or poison ivy yellow

he once again started from his conclusion

we need to get off oil

and worked back to a fantasy
logistic function like discovery trajectory
and we're well past the slow way down point
hence secular ...peak pricing from here on out
so we best get used to it and get cracking on alternatives

but what if there really is a few more cycles in the oil price machine

what if these windfalls only portend...way more drilling
till tye nextcollapse and the next alternative tech
bubble bursts from the stab of sudden
low cost crude...
just when we thought it was safe to go
back in the water...

asocial policy that sets a price for oil that will effectuate the optimal rate of change over
to alternatives

slap on a federal wellhead to gas pump
point of entry sliding tax on carbon
that will counter flux with crude prices
a complimentary 100 % wind fall profits tax
and oh ya...
a transfer in check form
of the total yield of these taxes
per capita to the electorate


"a $5/gallon tax where the revenue is devoted to subsidies for fuel efficiency and expansion of renewable energy sources".

set the optimal afdjustmentprice right and hold to it

and the alternatives will be able to borrow their funds on an open market

as to the r and d

one word
uncle gives prizes

the funds from the tax however must must must
cycle back to the ...people 100%

enough of this elite useage for our etterment shit

if theres market failure
in the adjustment speed
attack it with publically borrowed funds

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