Materially and economically, our culture is made possible by entrepreneurship, yet ideologically our culture is dominated by disdain or at least negligent regard for the entrepreneur.
Materially and economically, our culture is made possible by oil, yet ideologically our culture is dominated by disdain or at least negligent regard for oil - try and find an image in the Internet with a positive message concerning oil.
I am not sure which impresses me more, the enormity of the daring deception at hand, or the thrilling suspicion that our political order is remarkably good at having people let off steam by engaging in cheap talk, while the scapegoat - here the oil economy - is left alone in sufficient measure to do its job, despite its misrepresentation in the political discourse.
I suppose, by a lot of rent-seeking and other forms of political competition, it is possible to achieve in many vital areas of human survival a roughly workable equilibrium between figment and reality, even for extended periods of time.
It may well be that we are facing a precarious balance between the (widely unacknowledged) costs of ideology and the benefits of realism and reality, but humankind always depends on both, myths and facts.
Every culture is based on the most preposterous assumptions that will be gradually revealed in their delusion, and every culture survives only by avoiding too hard a bumping into the limits of reality.
Can it be possible that the marginal cost of producing oil was $110 per barrel in June 2014 and is only $50 per barrel in January 2015?
Here is how: in the first half of June 2014 oil consumption was very high relative to the then-existing world oil production capability. In addition, existing oil production capability is always declining as producing fields deplete. The marginal cost of a barrel of oil under such tight market conditions has to cover the capital cost of developing new resources as well as the operating costs.
Toward the end of 2014 additions to world oil production capability exceeded growth in consumption, meaning additions to production capability were no longer necessary, meaning the marginal cost of producing the last barrel of oil no longer needed to cover that capital cost. Sure, some oil company somewhere had to make the capital investment necessary to develop the resource, but most of those costs are sunk and competition in the market means they cannot make some consumer cover those costs. The market price under today’s looser market conditions only needs to cover the operating costs of production.