on up

In regards to the current conversation about the recent rise in price at the pump and what we can do about it James Howard Kunstler says,

In any case, all this wishing and lying is about to collide with price volatility to make the American voting public absolutely batshit crazy with dread and anger. That, of course, will only prompt more lying, whopper-spinning, and grievance-flogging in the political arena. It will be nearly impossible for the public to evaluate reality.

I was going to start with a bit about oil and gasoline but, Stuart Staniford has done a great job over at Early Warning so I’m just going to let you go and have a look.  I will reproduce a couple of his excellent images here and quote him as saying, “You can see that there's a very strong relationship over time. Technically, 97% of the variance of the price of gas is explained by the price of oil.”

 

More...

Speaking of oil, the noise about Iran continues to ramp up.  In response to the new economic sanctions,

Iran has stopped selling crude to British and French companies, the oil ministry said on Sunday, in a retaliatory measure against fresh EU sanctions on the Islamic state’s lifeblood, oil.

“Exporting crude to British and French companies has been stopped … we will sell our oil to new customers,” spokesman Alireza Nikzad was quoted as saying by the ministry of petroleum website.    More… 

And then there’s the less reported planned Iranian action surrounding oil trades in something other than the US dollar.


"Last week, the Tehran Times noted that the Iranian oil bourse will start trading oil in currencies other than the dollar from March 20. This long-planned move is part of President Mahmoud Ahmadinejad’s vision of economic war with the west."  - source  Will that really happen?  Will it be allowed to happen? 

Not surprising to see the cost of oil up at above $108/barrel in late February 2012.  Which means higher gas prices if you read above.  Of course if we’ll just elect Newt then he’ll bring the cost of gas down to $2.50/gallon.  ;-)


And with the price of oil/gas going up and fear of economic catastrophe pulsing through the American psyche the price of gold has also jumped.  Warren B has this to say,

"Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A.

Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B? 

Admittedly, when people a century from now are fearful, it’s likely many will still rush to gold. I’m confident, however, that the $9.6 trillion current valuation of pile A will compound over the century at a rate far inferior to that achieved by pile B."

http://www.berkshirehathaway.com/letters/2011ltr.pdf (pdf warning)

On a not complete unrelated note my boss just walked into my office and asked me where to buy a cow; not beef but a live cow for her to raise and later process for food.  Which leads us into funnier territory with this excellent video.

Lastly something a little personal.  Two weeks ago I crashed my bike, my first real cycling accident.

Fortunately that image makes the whole thing look way worse than it really was.  After the crashI walked 100 yards home with only a few bruises.  My 1979 steel frame Trek is quite beat up however and so it was with great anticipation that I ordered my first ever brand new road bike!  I have a great commuter and a mountain bike slash long haul set up but this will be my first new road bike ever.  It's being built this week by my LBS.

I’m competing in a race in May and between the crash and the race now seems like the time to invest in this Giant Defy 2.  It’s an entry level road bike but quite fancy by my standards.  Report forthcoming.   

Aaron