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... could remove the User Cost of selling an asset expected to appreciate in value, by being on a track to eliminate consumption of crude oil in line with dwindling supplies ... wouldn't that be down to marginal cost of production?

But of we are going to price at marginal cost of production, and are past Peak Oil, then that increases the amount of reduced consumption to get to any given marginal cost, as we burn through the infra-marginal, cheap to produce oil. And then that ensures that if we were pricing at marginal cost, we would expect the price to increase, and therefore its an appreciating asset, and therefore the User Cost of selling an asset expected to appreciate in value doesn't go away once we are on the downhill side of Peak Oil.

However, the User Cost can go up from the underlying floor created by the physical depletion of the cheapest to produce oil, if the expectation of an appreciation in price becomes stronger.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sat Jul 12th, 2008 at 08:55:17 PM EST
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