How can something that costs $15, or less, a barrel to get out of the ground be underpriced at $40 barrel as it was in the 90’s.
The price of gold is significantly more complex than the price of oil. Currency valuations aren’t dictated by the oil standard, they’re dictated by the gold standard.
And I’m telling you that your “fix”, which as far as I can tell is to do nothing, is dangerous.
Where do you get the idea that it costs $15 a barrel to get out of the ground? Drilling is expensive work, drilling equipment is expensive, don’t forget the cost of finding the oil in the first place. Then there’s the problem that it’s a highly flammable liquid that occasionally lights the drill equipment on fire. Then you have to transport that highly flammable liquid around the planet on really expensive ships that sometimes run aground and make a huge mess. You can tell oil was undervalued in the 90s because so many companies abandoned well and ceased exploration for new wells. When companies pull out of a market then that market is undervalued. Many companies pulled out of drilling in the 90s, therefore oil was demonstrably undervalued.
Actually the prices of gold and oil and all the other commodities is very simple. The price is the latest amount that somebody was willing to sell for and found somebody else willing to buy.
My fix is the only fix that can actually accomplish anything: get our idiotic interfering shortsighted government OUT OF THE WAY. End ALL drilling bans on ALL deposits in America, sell those leases and let the drilling commence. That’s the only fix there ever has been.
It is?
Investors are speculating in oil futures right now, for the same reason they speculate in gold futures - as a hedge against inflation caused by a weak dollar.