Friday, November 12, 2010

I've been watching the price of oil lately, and while in the short term the market continues to stymie me, from what I can tell, in the medium-to-long term the price of oil is governed by a negative feedback mechanism and is thus (potentially) predictable.

Our economy is reliant on petrochemicals and energy generated by burning fossil fuels. Should the price of oil rise too high, the economy will collapse. When the economy threatens to collapse, the demand for oil goes down, which means prices retreat. Therefore, oil follows a value which sucks any usable excess out of our economy, short of a level which would crash it.

Or in other words, our country is being steadily milked of its cash, not enough to kill the cow but too much for the cow to be happy.