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If one replaces gold with crude oil then the gravity of this becomes clear. What if Venezuela is smuggling its camouflaged crude oil inside Norwegian oil tanke
by achow 7y ago
If one replaces gold with crude oil then the gravity of this becomes clear.
What if Venezuela is smuggling its camouflaged crude oil inside Norwegian oil tankers?
- vardump 7y agoDifferent wells produce very characteristic product that's hard and expensive to mask. You could tell it from API gravity and sulphur content, among other things. See: https://en.wikipedia.org/wiki/List_of_crude_oil_products https://en.wikipedia.org/wiki/List_of_crude_oil_products So I don't see how you could economically camouflage crude oil from relatively simple chemical tests.
- rtkwe 7y agoThe question is are governments/companies checking and monitoring that actively enough to catch it or do they only check when they have suspicions about the provenance of some oil already.
- Fjolsvith 7y agoBig deal. There's a glut of oil and a dearth of gold.
- achow 7y agoBig deal for Maduro.
- Eliezer 7y agoI hear rumors that there are exactly as many units of oil sold as units of oil bought, and the same holds true for gold. I honestly have no idea what you could mean by saying that there's a glut of one and a dearth of the other.
- dagenix 7y agoBy that logic, you could never have an excess or dearth of anything.
- jermaustin1 7y agoThat isn't true, something being bought at the rate it is produced means that demand outstrips or meets supply. No excess, possible dearth. Let's say I manufacture a million widgets and can only sell one of them. HUGE excess. Now let's say someone wants to buy a million widgets, but it takes me 3 weeks to build one. HUGE dearth.
- dagenix 7y agoI agree with you, but that's not what gp wrote: > I hear rumors that there are exactly as many units of oil sold as units of oil bought Gp compared the number of items sold with the number bought, not taking into consideration the number manufactured.
- Dylan16807 7y agoAnd then you adjust your prices until supply and demand are back in balance. The excess/dearth, by that overly simplistic definition, becomes roughly 0. Even though the underlying issues haven't gone anywhere.
- mikeash 7y agoSeems like the other way around to me. Most oil gets used pretty quickly after it’s produced. Most gold sits in vaults doing absolutely nothing.
- dahfizz 7y agoSitting in vaults is what gold does. It's being "used" as a store of value. Just because it isn't being burnt up doesn't mean it's providing no utility.
- mikeash 7y agoNo particular quantity is needed to fulfill that function. If the gold supply were half as big, then each bit would store twice as much value and nothing would change other than the vaults being smaller. We have way more gold than is needed to do what it’s used for.
- dahfizz 7y agoYou're being reductive. If supply is the only thing that matters, then why has the price of gold continued to rise even though we mine thousands of tons each year?
- mikeash 7y agoSaying that there’s a glut of oil and a dearth of gold based on their prices is pretty reductive too. It’s a simple thought experiment: what would the world look like if there were twice as much X, or half as much X, than there actually is? For X=oil, there would be profound changes. Half as much would require a totally different looking economy. Twice as much would enable big changes. For X=oil, nothing much changes. The industrial and decorative uses continue as they do now. The “store of wealth” uses just have a ~2x difference in $/kg compared to now. Why does the price of gold continue to rise? Because enough people think they’ll be able to sell it for a good price later.
- Fjolsvith 7y ago
- riffic 7y agoThe oil's being burned and there's a finite supply. The gold will still exist in some form after the oil runs out.
- roenxi 7y agoIn their personal capacity, the vast majority of people would not care if their oil was sourced from Venezuela. How could any country be worse than Saudi Arabia?
- Quarrelsome 7y agoNorth Korea.
- ryanmercer 7y ago>In their personal capacity, the vast majority of people would not care if their oil was sourced from Venezuela. To add to this, oil is a bit different in the simple fact that you need some level of skill to work in that industry and you're generally getting a livable wage (if not a very nice one) whereas gold mining in some countries is still done by what are effectively slaves (even by children).
- gus_massa 7y agoIgnoring the moral problems of all these countries ... Oil is very different depending on the origin. Some oils have more Sulphur, some oils have more tar-like parts. Some oil is very dark and some is almost transparent-yellow. All these differences are fixed in distillation that separates the parts and removes the impurities, but not all distillation plants an handle all the types of oil. Anyway, after distillation most people care only about the price. https://en.wikipedia.org/wiki/Sour_crude_oil https://en.wikipedia.org/wiki/Sour_crude_oil https://en.wikipedia.org/wiki/Sweet_crude_oil https://en.wikipedia.org/wiki/Sweet_crude_oil
- roenxi 7y agoTrue enough but the gold we are talking about is real gold and basically as-advertised; the fake part is the branding. So if we care about oil source because of the quality of the oil the original analogy isn't relevant here - it was meant to indicate that there was a moral reason to track the source. But with oil that doesn't make sense because everyone is happy to buy from the Saudis, whose last scandal involved bone saws and acid vats. It isn't helpful to the conversation to replace gold with oil.
- bluGill 7y agoThat would be bad for a oil refinery as different crude oil sources have different contents. Some refinery must corrosion resistant metals or the crude will corrode them quickly, others can use cheap iron pipes. This assumes the refinery isn't in on the fraud. If they are in on it they know what they are getting and there won't be a problem. Of course I don't know the grades of oil from either place. (if I did know enough I'd probably not be allowed to talk about it...) It could be this substitution is fine for the refineries.
- _uy6i 7y agoThere is blending that takes place before counterfeit/smuggled oil is used so it meets the API/spec of the refinery. You can be sure refiners are testing before anything runs through the plant...