I have read up on ways to predict coming inflation. One of them frequently mentioned is the price of commodities. This is fine, but crude oil is bunched into this group. I question whether using oil as a guage is accurate at determining whether there is "too much money chasing too few goods".

http://money.cnn.com/2006/02/24/markets/oil.reut/index.htm

Disruptions in supply happen far too often with oil so I don't think it should be used as an indicator of coming inflation.

Interesting you should bring this up. I have been reading more of Larry Kudlow of late, and his outlook, unlike many other Classical Economists is a bit more flexible when it comes to liquidity and commodity referencing. gold being a good example.

There is certainly more at work within the political economy than a static application of price evaluations. For instance, gold has been on the rise, due to other things besides it's relation to liquidity. Fear is Always one of the most important factors that determine the value of scarce items.

I think oil is a poor choice commodity to reference the monetary system, as it is far more inflamatory and changes directions more than most women trying to make an important decision. However gold is doing what it is doing, as a result of this fear factor. People, who would never have considered purchasing gold, are doing so in record numbers, most likely due to marketing AND fear. This dries up the supply, and sends up red flags around the economic world. Inflation fears triple and things go into a worst case scenerio.

Opps, I have gotten off subject, which is oil and inflation. No, oil in NOT a good indicator. things have to be taken holistically, and someone of great insight has to be there to interpret things. Larry Kudlow is my idea of the man on the spot to watch here. If he says not to worry, then I do not worry. But I still pay attention to others, as one person, no matter how good, can always be wrong ocassionally.

However, oil is very much at the root cause of another inflationary factor, transport, if fuel prices rise, the cost of getting goods to the customer also rises, that cost increase is usually passed on to the consumer, particularly if margins are already tight.

I agree with this, but, I believe, that rising oil costs can be somewhat, but not totally, offset by new technologies and methods. This means rising transport costs, in my opinion, do not cause inflation nearly as much as loose monetary policy does.

but what isn't affect by the same thing? Platinum prices fell a while back when someone came up with a more efficient way to make it... the same is true for food prices. If someone were to come up with a good way to make lumber out of recycled plastic (there are some inroads into this already) then construction prices would fall. etc etc etc.

Oil is pretty fundamental to the economy, at least at the present moment, and until that changes, it would seem to me to be a worthwhile indicator

Expat, you cannot MAKE Platinum. If you could, you would be a True Alchemist. Please try again to explain your point here.



An indicator of what?


Oh, and speaking of oil and alternate forms of obtaining it, read this interesting article.

I assume Expat meant PGM refining techniques had improved.

indeed.


Indicator of what? I'll give you a hint ... ... I *WAS* on subject ....

If you insist in speaking "in code", that is your business.

It appears there is always the Ying and Yang of life. For someone’s Ying of dissatisfaction as to oil Prices there are other’s Yang of gratification.

JohnL Hit the nail driving it right thru simpleminded foreheads.



These seem familar in an oil groupies sort of way somehow?

MUR – El Dorado Ark.
IMO ( Toronto) (A remainder of the Old –Esso Oil) Imperial Oil


Shale Oil:

A publication of the State of Utah (1980) reports "The potential of oil shale is enormous.
While found throughout the world, nearly 62 percent of the world's potentially recoverable oil shale
resource are concentrated in the United States...The largest of the U. S. oil shale deposits is found in
the 16,500 square-mile Green River formation in northwestern Colorado, northeastern Utah, and
southwestern Wyoming. The richest and most easily recoverable deposits are located in the Piceance
Creek Basin in western Colorado and the Uinta Basin in eastern Utah...The deposits are estimated to
contain 562 billion barrels of recoverable oil. This is more than 64 percent of the world's total proven
crude oil reserves."

Colorado, Utah and Wyoming have separate Mineral and surface rights. Most the Shale is located on Federal Land where bidding will commence one day.

http://hubbert.mines.edu/news/Youngquist_98-4.pdf

26th Oil Shale Symposium

http://www.mines.edu/research/ceri/

With its $560 million Dollar facility Unocal operated the last large-scale experimental mining and retorting facility in western United States from 1980 until its closure in 1991. Unocal produced 4.5 million barrels of oil from oil shale averaging 34 gallons of shale oil per ton of rock over the life of the project.

Did not do so well in the late 70's and 80's with shale. But when all appears lost, patients appears to be a virture to eventual success maybe.

True. All commodities are subject to externalities, positive or negative. But oil, to me, is subject to this more than most others. You see what one storm, or a group of Nigerian terrorists can do to the supply. Look at how much a barrel of oil costs now compared to 1998 (back when a bottle of spring water was more expensive than a gallon of gas) for example. Then compare that to the inflation rate for that time period.