Tuesday, April 22, 2008


During the great tulip bulb craze, some 500 years ago, the price of tulip bulbs rose to levels that are still unbelievable. The bulbs turned out to be worthless, but, during the craze, everyone just had to own the most colorful new varieties.

At least with today's oil bubble, there was a foundation built on true need. Some time ago, the foundation was left behind and the current price is based on one irrational thought piled onto another. Wouldn't you know, that the bubble would be bubbling so strong on Earth Day?

The following paragraphs were copied from the Cafe Hayek blog:

So, on this Earth Day, I offer you here my essay, inspired by the work of Julian Simon, entitled "Cleaned by Capitalism." Here are the central paragraphs:
Before refrigeration, people ran enormous risks of ingesting deadly bacteria whenever they ate meat or dairy products. Refrigeration has dramatically reduced the bacteria pollution that constantly haunted our pre-twentieth-century forebears.
We wear clean clothes; our ancestors wore foul clothes. Pre-industrial humans had no washers, dryers, or sanitary laundry detergent. Clothes were worn day after day without being washed. And when they were washed, the detergent was often made of urine.
Our bodies today are much cleaner. Sanitary soap is dirt cheap (so to speak), as is clean water from household taps. The result is that, unlike our ancestors, we moderns bathe frequently. Not only was soap a luxury until just a few generations ago, but because nearly all of our pre-industrial ancestors could afford nothing larger than minuscule cottages, there were no bathrooms (and certainly no running water). Baths, when taken, were taken in nearby streams, rivers, or ponds, often the same bodies of water used by the farm animals. Forget about shampoo, clean towels, toothpaste, mouthwash, and toilet tissue.
The interiors of our homes are immaculate...


The fact is that we live in a "cleaner world". We enjoy a cleaner world because we can afford to spend great effort to reduce pollution. The most recent problem has been that the extreme left has redefined pollution to include the air we breath out of our lungs, which happens to be the clean air needed by our plants. If the left were sincere about the "pending world ending disaster" and about reducing carbon dioxide they would get very serious about reducing the population on the planet. Pretty soon, we would have forced sterilization, forced abortions, euthanasia, child lotteries and who knows what other "population control programs" forced upon us.

The fact is that we have not reached the self sustaining limits to what this old earth can bear. The more carbon dioxide we produce, the more plankton we nourish. The evidence for man made global warming is shaky at best, yet we have caused hundreds of thousands of women and children to literally starve to death and hundreds of millions more to go hungry while we put food products in our fuel tanks.

Oil is currently caught in the vice grips of supply and demand. The old adage that price cures price does not fail. The reason the US refineries are running at only 80% of capacity is because there is too much gasoline in storage. The speculation that is pushing the price of crude to irrational levels will not hold. Mad crowds can chase bubbles a long way, but sanity wins in the long run.