GAS PRICES: THE WIND BLOWS AND THE BULLSHIT FLOWS

I published a post on May 5 titled Gasoline prices vs inflation that you might want to re-read as the current bullshit comes down. As I've mentioned many times, I get proprietary information due to my professional status. There is a private study now available from the Dallas Federal Reserve Bank (OIL country)that says if we adjust for inflation, crude prices would have to rise to $75-$80 per barrel (twice the current price)to get where we were in 1981, and gasoline prices to $3.50 per gallon. So oil and gasoline prices are not devastatingly high by historical standards. The flaw in this statement is that they are using the highest prices ever as a reference point, so this is clearly bullshit.

This "study" also points out that half our oil comes from domestic production. These are all old fields. All costs for this oil are in. So the lifting price per barrel is around $5? $10? Whatever, the oil companies are selling the domestic oil at the world price of $40. Wonder how they report record profits?

Further, the study then concludes from 1. a false premise and 2. From a report of profiteering by U.S. companies; that it's no biggie, it will only affect the economy by .5%. Keep in mind they are using 1981 record high prices to draw this "conclusion".

I can't tell you how glad I am to get all this "inside" information and studies by professionals. I always keep in mind that one of the worst market losses ever was engineered by a company called Long Term Capital Management that had two Nobel Prize winners on its board; Myron Scholes and Robert Merton, who had been awarded the Nobel prize for economics in 1997 for their work on derivatives, and a dazzling array of professors of finance, young doctors of mathematics and physics and other "rocket scientists" capable of inventing extremely complex, daring and profitable financial schemes. The company collapsed in a maze of mis-management, crazy schemes, and outright fraud.

Never trust intellectuals with anything more important than a grocery list; at least you can take their mistakes back to the store and get your money back.