Tuesday, January 26, 2016

One Salmon Costs More Than Barrel of Oil


That's because the fish don't just swim in to the harbor and jump up onto the dock by themselves...

Western Europe’s biggest oil producer is suffering from the collapse in crude prices. But another top commodity export in Norway, salmon, is fetching record-high prices because of low supplies and a weak currency. As the seafood-industry news site iLaks.no reported this month, oil has fallen so low and salmon risen so high that one standard, 4.5 kilogram fish now costs more than a barrel of crude, measured in kroner.

Fishermen in Norway now getting paid more (in kroner) for their productive contribution relative to their oil rentiers previously.

10 comments:

Bob said...

Why do you use the term 'rentiers'?
Salmon and oil are natural resources, and are part of the primary sector. This sector may include examples of monopolies but they are not rentiers.

Ignacio said...

Oil doesn't put itself in tankers alone either, independently of how the large the benefits of both activities are or how they are distributed.

Matt Franko said...

"Oil doesn't put itself in tankers alone either,"

Well the price for oil isnt zero....

Matt Franko said...

Neil's comment from over at Bill's germane:

"Only a little bit of the value of primary resource exports gets injected into the source country – via paying the staff and suppliers of the extractors. The rest is essentially rent."

Bob said...

So Neil believes that exporting a primary resource and making a profit on it constitutes rent?

Bob said...

Well the price for oil isnt zero....

With enough subsidies the price of oil can go below zero and still make it to the consumer.

Matt Franko said...

Well if we say profits are a form of rent we are going to start a big argument...

So even leaving profits out of it, with oil there is a global cartel operating with impunity (OPEC) so when they get in their sweet spot all global producers can enjoy the same monopoly rent for a while...

And as all the global producers enjoy the rent (including US domestic entities operating in many states too...) its hard to go to Congress to get authorization to drop a few laser guided 2,000 pounders down the elevator shaft at the next OPEC meeting so we have to do it the hard way and increase non-opec production to the point where the cartel loses its ability to set their high rent prices and the rent is largely removed as the non-cartel producers keep lowering their offers as they come on line...

So we should be able to see what happens when the rents are removed over the course of 2016 here if oil stays down here in the $30 range...

I would think it would have a positive effect as more USD flow can now be spent on productive contribution which should be a positive for the US domestic economy...

So in Norway the fishermen are going to make more munnie in here while the oil rent people get a pay cut maybe down to zero... couldnt happen to a better bunch of assholes imo....

Ignacio said...

Previous bubble (>100 USD) was due to inventory (not of oil, but gasoline!) build up in China during previously to the olympics, but the global mean production price really isn't much lower than 70 USD. The years of cheap oil where the OPEC would rig the system to the point of breakdown (like in the 70's) to break the West (and blowback to western working class) are gone.

Sure S.A. and other producers enjoy bigger profit margins, but oil TRULY costs to produce that much and prices are going up on average. The volatility in prices will continue to happen as producers dig dipper to maintain cash flows, rigs close down and there is a clean up of inventories on downturns and as production is relatively increased or the economy activity drops due to high costs on up turns. But the average and trend is clearly established and we are played with borrowed time now.

The only way to stop is to dump demand either through substitution or reduction, and that's not happening to a big degree. One way or an other the oil era is fading and this super low and super high oil prices are going to continue.

The biggest demand comes from globalization (international movement of materials and goods) though, so is easy to undo much of the current demand as we de-globalize (so this will help on fading the oil era faster).

Tom Hickey said...

Well if we say profits are a form of rent we are going to start a big argument...

That is the neoclassical move to remove rent as an economic factor. It was in response to the classical economic conception of rent, Marx, and especially Henry George.

Bob said...

I never knew that Neil fellow was a Marxist ;)