Oil and money

Real minus Nominal oil prices over the years.

I am talking about the variation between the nominal and real oil price over time. My hunch here is that a measured, aggregate economy, economizes well on the most constrained five or six things. Hence, I would expect to see the unit of account vary by 20% or so around the most constrained goods. The graph shows oil dominates dollars.

In this circumstance, I might stockpile of oil, except for one thing. Oil cannot get any tighter, we are at the uncertainty limit. Oil distribution must deflate (reduce, contract) in size and volume. What remains is a shorter oil distribution stack. This is new for the post 1960 period, but not necessarily a reduction in standard of living.

We got into this situation because the value of new technology continued to race ahead of the value of oil, oddly. The solution is to commercialize more of our transportation, using technology, to restore the transporaton network to a good multiple of the oil network.