The genius of those who trade in oil is their realization of oil's two-pronged value. A piece of art, while inspiring, even well-rendered, cannot have more than a speculative value. The price of, say, "The Potato Eaters," by van Gogh is based upon the perceived value of the piece. If a collector is prepared to spend seventy-five million dollars to acquire that painting, then the painting is worth seventy-five million dollars. Tickets to a Hanna Montana concert recently sold for upwards of three hundred dollars. The retail price of those tickets was somewhere between twenty-six and fifty-six dollars. Their worth cannot be calculated in objective terms. Child A is willing to pay one price, while Child B can only afford the retail price. Unless Child B is willing to be first in line when tickets go on sale, Child A is the one going to the concert.
It's also crucial to point out that a Hanna Montana ticket is not a requirement to sustain life, neither can it provide transportation nor home heating. The experience of a Hanna Montana concert isn't something I can place in my gas tank. Yes, it can be taped and broadcast, or sold at Target or on iTunes, and so it has a shelf-life for those who can profit from its commercial potential. However the ticket price, speculated five or more times above its asking price was not based upon a rational assessment of its value. Rather, it was based upon the ephemeral value (if any such exists for this artist) which attendees of her concerts can take away. No fixed price can be placed upon that. Last year, Woman III, a painting by Willem de Kooning was sold by media magnate, David Geffen, for one hundred forty-plus million dollars. I love de Kooning's work - it moves me to tears. But I could cut it up, put it into a blender for 10 minutes, and then pour it into my gas tank, and it wouldn't run my Subaru any better than the tears which I shed over it's beauty.
What is the value of crude oil? I assume it's based upon some complex calculus of factors such as prospecting, the cost to pump it from the ground, transportation, port fees, current supply, and probably over a hundred other things. However, included in that is probably how Hugo Chavez or Ahmadeenejad feel when they wake up tomorrow.
Let's examine what oil is. Here's a short extract from Wikipedia (not my favorite source, but it's not my oracle for a full, comparative abstract on Homer or The Song of Songs, so I'll consider this entry to be more or less accurate - who the f _ _ _ cares, it's my blog!)
Petroleum is used mostly, by volume, for producing fuel oil and gasoline (petrol), both important "primary energy" sources. [2] 84% by volume of the hydrocarbons present in petroleum is converted into energy-rich fuels (petroleum-based fuels), including gasoline, diesel, jet, heating, and other fuel oils, and liquefied petroleum gas. [3]
Due to its high energy density, easy transportability and relative abundance, it has become the world's most important source of energy since the mid-1950s. Petroleum is also the raw material for many chemical products, including pharmaceuticals, solvents, fertilizers, pesticides, and plastics; the 16% not used for energy production is converted into these other materials.
Amazing, no? Oil is used to make just about everything, from the clothes on my back to the car I drive, and what fills its tank. Now that's market coverage. What's further amazing is not how pricey gasoline is these days, but the fact that it's still so relatively inexpensive!! Neither the finest washing machine nor the biggest ruby can power my Subaru. If and when a means for producing something that rivals or exceeds oil's astounding spectrum of uses, and ease of procurement, then the nations whose economies rely on oil production will be in trouble. Or, they may cause trouble in order to sustain the value of their commodity for as long as possible.
In the meantime, oil is it. What's more - it has both intrinsic and speculative value. Yes, other resources claim this dual value, but something like a diamond, for example, hasn't nearly the same scope of usage. In fact, right now, the only other thing I can fathom with value that straddles a line between objective and ephemeral, actual and perceived, is human consciousness. Perhaps it is best to reduce this consciousness thing simply, to human life. Human life can't be replaced, well depending on who you ask and for what purpose, but for the moment, if I get flattened by a truck today, nobody can replace the very essence or uniqueness that is me. It appears, due to the agglomeration of experiences, education, artistic talent, charm, humor, and humility that make up what is known as Chaim, some people may be willing to invest a few bucks per year to sustain. *B'ezras Hashem. Inshala. Fingers crossed. ptooee ptooee . . . But in order to get some entity to give up cash, if say, I and that big truck do happen upon one another in some unfortunate turn of fate, that would be known as a lost gamble. Speculation. In other words, I'm nearing forty-one, I have no major health problems (see starred section above) and so it's a good bet for an entity such as State Farm to "sell" me a policy that I probably won't "buy the farm" soon. If I was sick(er) or old(er), it would cost me more, i.e. it's a worse bet for the folks at State Farm if I'm in a wheelchair or have asthma or something.
But oil? Hell, if I were to strike oil in my backyard and prove a consistent flow of twenty five barrels a day for a week, you could safely say I wouldn't need to worry about much in terms of, well much of anything. It would not only be the value of the actual oil I would sell, but my personal value would then be scaled against the average value of such backyard wells in Southern California, the world market prices, and whatever else. Just as a note, I can't legally drill for oil in my yard, 'cause someone else, someone I don't even like, owns the oil and mineral rights to the chunk of terra crust under my house !!! When we were purchasing our house, the seller wouldn't even consider placing the oil and mineral rights on the table, because as she said, "you couldn't afford it." I have no doubt. Oil may not be very nice for the atmosphere, but it makes a hell of an anti-depressant, and one spiffy pair of pants too.
There may be no accounting for taste here, but if it's light and sweet, it'll get you off the doll.
No comments:
Post a Comment