Greg Mankiw has an interesting perspective on oil prices.
Below is the price of oil relative to wages. Roughly, the graph shows the number of hours a production worker needs to work to make enough to buy one barrel of crude oil. What is most striking to me how little long-term trend there is (despite great volatility) and that the current level is very much normal by historical standards.
I suspect the lack of a trend has to do with the fact that this measurement is factoring in a single nation’s wages against a global commodity. While the American economy is a powerful mover in the global economy, it is not all of it.
You will note, the oil supply problem was solved by American ingenuity, not government.
If we could get government out of the way of Keystone pipeline…wow that would be great.
kev:
So OPEC had nothing to do with the glut of oil on the market? ND oil can’t compete at $30/barrel so I think you are making stuff up again. Did you even read the link?
Baldy,
OPEC does not exist anymore in any meaningful way.
Saudi’s are pumping big time to break the N. Dakota producers with low prices.
Saudi’s do not do that without our innovation.
Have you not watched a shred of business news this last 12 months?
kev:
That is your opinion, but not based on reality.
Baseless personal attack. Please remove and ban the above poster.
kev:
I heard a good discussion this morning on the radio. An analysis by several professors at an engineering school were claiming that the economic benefits of lower gas prices were far out weighed by the effect on the overall US economy by the downturn in the US oil/energy industry. That would include everything from frac sand (big downer in western WI), material suppliers, engineering and construction, drilling and associated work in the oil patch. If you own energy stock or bought land on spec in ND you took a big hit.
Now, do you give “American ingenuity” credit for this, or blame government?
American ingenuity.
Yes, there are consequences to energy investors (now is time to buy for long term), but low energy prices are great thing to American economy and for keeping the ice age at bay.
Is ND product even the same quality as the Saudi’s ?
If Impala’s and Mercedes are fetching the same price , are we surprised if the Impala inventory sits on the lot ?
kev:
I guess comprehension isn’t your forte, eh?