Comments: Why aren't we skidding on sky-high oil prices?

I would like to present one probable explanation of the observed effect. There is a wrong understanding of the causality principle among economists. They consider "before" means "because of". Economy, however, is not about production, but about people ranking.
Economics is a natural process deals only with the distribution of effective capability to earn money (same as produce income). Whatever is physically produced is distributed according to some common rules. These rules result from the interaction between people (expressed as dynamic ranking of the people according to the personal income) and hold for a relatively long time. In the distribution process, people have varying effective capability to defend their rights to obtain (possess) a share of total product, which includes everything with a price denominated in money. In the end, individual shares are proportional to the effective capability to defend their right of possession.
Wealth is a sum of parts of production belonging to every member of that society expressed in some money form convenient for calculation. Since individual parts of the wealth are proportional to the corresponding effective capabilities to earn money, the total wealth can be expressed as a sum of the individual capabilities independent on the volume and specific features of the produced good and services. The effective capability to earn money, which is called below capability, has a numerical value evolving with time according a very simple law. Whatever is produced in kind and volume (for example, oil, computers, loans, financial advises, …), the total amount of "wealth" changes according to evolution of the distribution of the shares expressed in money rather than in physical units.
Physical production of “goods” and “services” is a realization of some random process dependent on human capability to invent. This creates some confusion about the relative importance of “constituent parts” of the total economy. A monetary description of that process, however, is a simple time function. This function is known to the extent that the population distribution over age and distribution of capabilities to earn money is known. One can find the total monetary “weight” or size of an economy (GDP) by summing the individual monetary incomes earned by the working age population. There is an infinite number of product realizations corresponding to one “money” or “wealth” state. Hence, one can study an economy independent of production (including oil), the latter being only a set of means for earning money (to chop personal part), with total volume of money predefined and fixed at a given time. Innovations are needed to obtain a larger part of the total (but predefined) income relative to any previous technological solution.

Posted by I.Kitov at April 11, 2005 04:17 PM

On the extremely high oil prices, its outrageous, wrong, impolitical, and overall unconstitutional. We as the people of our government should be able to have a say in these oil prices and be heard. We as the people should not be told by the rich snob oil producers what our oil prices should be. Also if they are to be this high ,oil prices, we need to find "affordable" solutions for transportation. I have many more opinions but it would take all day so the basic will do.

Posted by jarid at May 2, 2006 06:59 PM