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Wednesday, January 02, 2008

Commodity prices

Drudge reports that gold has surpassed $850/oz and oil is over $100 bbl. And this is being widely reported as news. The price for crude in 1980 was $37/bbl. In inflation adjusted dollars this is about $99/bbl. So we've already been there over a quarter century ago. And again, with the watermelons (green on the outside, red on the inside) stopping any and all domestic oil drilling, India and Red China making significant demand on oil production that weren't there in 1980, I'm surprised it's taken this long to get back to these prices.
As for gold, at $850/oz spot, that translates to about $320/oz spot in 1980. In other words, at $850/oz, the current spot price is about 40% of it's 1980 high point (put another way, gold would have to be at $2270/oz in inflation adjusted dollars to be at the same price in 1980).
Now, the thing about commodity prices, specifically oil, is that production of the commodity makes for fungibility. In other words, if the fools in Congress get out of the way and allow us to develop our own oil reserves, that means we purchase less on the world spot market thereby freeing up production for the rest of the world and easing demand by increasing supply. And our own production is not open to choke points like the Straits of Hormuz and is much more easily defended than Saudi oil fields. Also, remember when the green wienies said that by me filling up my SUV I was pouring money into Al Queada? Well, by drilling our own oil, that problem goes away.
Oh ,and a BTW , if we'd been drilling in ANWR that oil would now be online. So, in effect, Norm Coleman and every single Republican that votes for ethanol, votes against drilling in ANWR and the coastal shelf and in the Gulf of Mexico has sent billions of dollars to Iran, Saudi Arabia and the like. They have cost the American citizens billions in extra costs for nearly everything.
I've said it before: the best thing Congress and any President can do for the American economy is to stay the hell out of the way! Leave us alone! We have done and will always do a better job with money and jobs that you people ever could. Ever!


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