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June 17, 2009


rich t

Hi - I really enjoy your articles. I am a little unclear on something, though. In "the price is not right" you describe the "Hotelling" view of pricing where the price of something can reflect a scarcity rent. But then in "mr. market gets it wrong again" you write that since supply is outstripping demand, oil prices shouldn't be rising like they have. Therefore, the rise must be due to speculation. But couldn't the rise be due to scarcity rent as you had described in the prior article?

Just trying to reconcile the two pieces. Thanks again.


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