Monday, December 24, 2007

Oil Costs and the Price System

"But there's a potential obstacle to [ConocoPhillips] vision: not enough people to get the work done. Half of Conoco's employees are eligible for retirement within five years. ... The oil industry is suffering from massive layoffs that took place during the oil bust. More than 500,000 petroleum-related jobs were lost between 1982 and 2000 in the U.S. ... Enrollment in petroleum-related undergraduate programs fell 85% from 1982 to 2003", BusinessWeek, 24 December.

As long as the price of oil stays high, salaries in the oil sector will increase. It's price that drives cost, not vice versa. High prices draw more resources into a sector.

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