May 28, 2008

The problem isn't the price of oil

French fishing crews will continue a blockade of ports and fuel depots in protest at marine diesel prices and the Malaysian government have announced a ban of foreign-registered vehicles buying subsidized gasoline. Prices have more than doubled in the past year to $135 a barrel, pushing up the price of fuel, energy bills and food.

In the USA in 1970, gasoline was 34 cents per gallon. Gold was $35 an ounce. So an ounce of gold bought about 100 gallons of gasoline. Today, gold is $920 per ounce and gasoline $4. So an ounce of gold will buy about 230 gallons of gasoline. Priced in gold, gasoline is now less than half what it was in 1970. The problem isn't the price of oil; the problem is money is becoming worthless, and wages are not keeping up with this inflation.

No comments: