Quote Originally Posted by jk
in new england wood is said to warm you FOUR times: when you cut it, when you split it, when you burn it, and when you think about the money you saved. it's hard to capture all that in thermodynamic terms.

re gold and oil: although oil/gold looks flat for the last 5 years, over longer periods iirc oil looks expensive relative to gold. if someone has that chart handy it might be worth a look. if my recollection is correct, the question then is whether there really has been a demand shift up for oil so as to permanently change that relationship, or whether the ratio will eventually revert to the mean.

A good case can be made against automatic long term mean reversion. Very simply, when you use gold, you don't use it up, but when you use oil, you do. It's an inherently depleting resource. Gold doesn't get scarcer over time, but oil does. I'm in the camp that says that peak oil is real, but that it is likely to play out over the course of decades and has little to do with the recent surge in oil prices.