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Politics : Formerly About Advanced Micro Devices
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To: Road Walker who wrote (373440)3/10/2008 3:11:22 PM
From: TimF  Read Replies (1) of 1572965
 
you think we are wealthier with $100 oil than with $20 oil

I think nothing of the sort.

What we are wealthier with is $100 oil, than with no oil, or with no oil imports.

Oil used to be worth $20/barrel, now its worth $100. Some of that increase is just inflation (meaning dollars are worth less). The rest reflects the fact that oil is less plentiful compared to demand (because demand has increased).

If the supply of oil increased so that the price went down to $20, than we would be wealthier than we are now. The issue wasn't "does more expensive oil cost more", of course it costs more, but that has nothing to do with the issue, unless the oil is so expensive that its not worth it for us to buy it. And if that was the case we wouldn't be buying it.

Whatever the price of oil is at the moment we only buy it when we think it is more valuable then the price. So we gain from buying it. The seller only sells it if its less valuable to him than the price, so he gains by selling it. Its a win/win trade, not a transfer.

The trade happens in the context of the current price for oil. The fact that it used to be $20 is almost totally irrelevant to this trade. Oil is a $100/barrel commodity now. In the future it could be $50 or $500, either way the trade takes place at that price, and it only takes place if both sides value what they get more than what they give up.
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