Sunday, July 20, 2008
Be Careful What You Wish For
We've all been wanting oil prices to come down. Well, not libtards, apparently, but reasonable, responsible, mature thinkers would like to see oil prices come down.
You see, in an engine, oil is a lubricant, that helps an engine run smoothly, without overheating and scraping metal shavings off of the engine parts as they move together.
But in an economy, oil is a friction, not a lubricant. Energy prices above zero represent a drag on the economy. Only oilmen sell oil for its own sake. For everyone else, oil, and its derivatives, represents overhead, not revenue.
Well, oil prices have just undergone their biggest weekly drop ever.
Why?
No major new sources of energy - either in oil nor in some replacement technology - have come on board. And there has been no sudden sea change in the willingness of the libtards in Congress to allow these new sources of energy to come on line.
Even if they did, the long time lag between Congress's willingness to take the responsible course of action and the time the new energy could actually reach the market would mean that the net present value - the value of a future kilowatt's worth of oil or some form of energy that can replace a kw worth of oil someday, discounted by a reasonable interest rate back to today, of that new energy, as set by marketmakers, is quite small.
No, if energy is falling all of a sudden, that's not because of the expectation of good news on the supply side. It's because of the expectation of bad news on the demand side.
Oil prices are falling because economies are slowing down, and as a result, are not locking in future prices on nearly as much oil.
That said, I'll wager that 90% of the dumbasses that blame "speculators" for high oil prices don't even know what a speculator is in this market, or what they do.
Splash, out
Jason
You see, in an engine, oil is a lubricant, that helps an engine run smoothly, without overheating and scraping metal shavings off of the engine parts as they move together.
But in an economy, oil is a friction, not a lubricant. Energy prices above zero represent a drag on the economy. Only oilmen sell oil for its own sake. For everyone else, oil, and its derivatives, represents overhead, not revenue.
Well, oil prices have just undergone their biggest weekly drop ever.
Why?
No major new sources of energy - either in oil nor in some replacement technology - have come on board. And there has been no sudden sea change in the willingness of the libtards in Congress to allow these new sources of energy to come on line.
Even if they did, the long time lag between Congress's willingness to take the responsible course of action and the time the new energy could actually reach the market would mean that the net present value - the value of a future kilowatt's worth of oil or some form of energy that can replace a kw worth of oil someday, discounted by a reasonable interest rate back to today, of that new energy, as set by marketmakers, is quite small.
No, if energy is falling all of a sudden, that's not because of the expectation of good news on the supply side. It's because of the expectation of bad news on the demand side.
Oil prices are falling because economies are slowing down, and as a result, are not locking in future prices on nearly as much oil.
That said, I'll wager that 90% of the dumbasses that blame "speculators" for high oil prices don't even know what a speculator is in this market, or what they do.
Splash, out
Jason
