Sudden Drop in Crude Prices


Let’s see how long it takes at the pump.  Crude prices have dropped below $100 from over $110 yesterday.

I was pointing out to a few people the other day that if it wasn’t for the $1.05 USD / CAD exchange rate we would be paying around $2/L right now.  The 30% hike in prices is about what is to be expected with supply interuptions, but the overall price is due to the inflating US dollar.

If you re calculate the price of gas using gold as currency instead of the US dollar, you get the chart shown below.

Taking a ratio of average American and average Canadian gas prices gives about 1.29 (so our gas is naturally 30% more expensive to pay for socialism).
Comparing this to the chart suggests we should actually be paying 48.3 for our fuel.  The rest is due to inflation caused by printing the money required to pay for social programs.
FYI, unpegging from the US dollar won’t fix our problem due to the close connection of our economies.  It will help Russia and China, which is why they are leading the call.

What’s the point?  It’s to illustrate the difference between economics and finance.  Economics deals with wealth (consumables, production, resources) while finance deals with money (pieces of paper).  Allowing people who do not understand the difference to govern is how we get rampant inflation which simply makes the average person less wealthy.  Most people only have money (pieces of paper) and possibly property (but usually this wealth belongs to the bank for people under 50) as opposed to real wealth (bars of gold, barrels of oil, bushels of wheat, properties).  So, when inflation hits your pieces of paper get you less than they did before.  The bar of gold is still a bar of gold.

Click the chart below for the original article.


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