Tuesday, March 22, 2005
The REAL Price of Oil?
Remember the previous WSJ article cited below (this is a new link to it) http://online.wsj.com/article/0,,SB111024275947372968-search,00.html?collection=wsjie%2F30day&vql_string=Retooling+%3Cin%3E%28article%2Dbody%29 that showed that the oil used to produce a BTU (British Thermal Unit) has dropped by 55% since 1973 (from looking at the chart in the article it's about 40% less oil to produce a BTU since the highest inflation-adjusted oil price of 1980).
With that as the case, to duplicate the economic impact today of the high price per barrel of oil from 1980, it would have to reach not $90, but closer to $150!
The problem is not the price of oil, the problem is short memories and the lack of business plans to deal with such contingencies. I'm really tired of the misreporting by the press about these things, claiming that these are the "highest prices ever." Balderdash, I say. Some real reporting instead of unquestioned acceptance of press releases might be refreshing on this topic. Do we have a budding oil crisis or do we have persistent poor news reporting?
Kindest inflation-and-productivity-adjusted regards,