Oil's peakiness is not the issue at the moment, it's the bursting of the dollar-denominated commodity and currency futures markets.
They were incredibly correlated and incredibly inflated.
from the FT<http://www.ft.com/cms/s/0/49b6ff0c-673a-11dd-808f-0000779fd18c.html>
:
"At today's prices the value of oil in the ground exceeds the combined value of all the world's equity and debt markets.
...at current prices the value of oil in the ground is $162,000bn (€107,659bn, £84,401bn) - more than the total value of all equity markets ($52,300bn) plus all debt markets ($67,000bn.)"
Indeed it almost exactly equals the total value of all tradeable financial assets, which the McKinsey Global Institute estimated was $167,000bn at the end of 2006."
The article is making a different point, but what I'm saying is this: oil was radically overvalued relative to modern capital's ability to make it valuable.
Good news: the price is coming down.
Bad news: why the price is coming down.
On Mon, Aug 11, 2008 at 8:41 PM, <uvj at vsnl.com> wrote:
> LRB
> http://www.lrb.co.uk/
>
> 14 August 2008
>
> Past Its Peak
> http://www.lrb.co.uk/v30/n16/klar01_.html
>
> Michael Klare
>
> Unlike the oil 'shocks' of the 1970s, the current energy crisis is almost
> certain to be long-lasting. None of the quick fixes proposed by pundits and
> politicians - drilling in protected wilderness and maritime areas, curbs on
> commodity speculators, pressure on members of Opec to increase output - is
> likely to have much impact.
> http://www.lrb.co.uk/v30/n16/klar01_.html
>
>
>
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>