If you have read this humble blog for a while you will know that high oil prices have never panicked me for a second. WHY?
Because the cure for high oil prices is high oil prices. Everything is relative.
In 1962 when I was a hot rod hipster riding up and down main street of Ellendale Gasoline (regular) was .27 per gallon. A good car sold for $2500. A house in Fargo of decent function was $12,000. People who worked for my dad made $120 per week with lots of overtime. A candy bar was a nickel. A coke was a dime. You could mail a letter for 3 cents.
In 2007 Gasoline I bought last week was 2.83 a gallon. A good car sells for $25,000, That house in Fargo is now $120,000, People working at the garage in Ellendale with overtime make $1200 per week, Hershey bars are 50 cents, Cokes from the vending machine are a buck or so, and you need 41 cents to mail a letter.
Overall about a 10X multiplier.
So, when I hear all the arm waving about the price of Oil I only hope it hits $100 soon so it will collapse even faster and further when the get-rich quick-folks try to cash in. Every technology known to man and some not know will be implemented.
Gasoline is a classic bubble.
This bubble WILL BURST. Count on it.
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