WHAT IS 'COST'?
AKSIOM
ALL COSTS ARE LABOR COSTS
MARKET PRICE AFFECT COSTS, NOT VICE VERSA
People, think about, it, just think
What is cost?
How much does one lbs of tomato cost?
Answer: $2
Wrong answer; tomato is for free, tomato doesn't need to get paid
It is the HUMAN producing the tomato who wants to get paid. That is the cost, what the human demands.
Let's take crude oil as example.
Current price is $94/barrel. What does this mean?
Well, it means that AS LONG AS THE EXTRACTION TECHNOLOGY EXISTS, every human involved from extraction (owner, driller etc) to refinery (owner, workers etc) to the gas pump (owner, workers etc) want to get paid. THAT IS THE COST.
Of course, the owner of the technology wants his cut also.
Crude oil in itself is for free from God (or Nature for the non-religious).
CONCLUSION
ALL COSTS ARE LABOR COSTS
So, when people say: Cost of 1 barrel of crude oil is $40, it means that the owner of the technology, the owner of the land, workers, from extraction to retail demand $40 per barrel.
So, since all costs are labor costs, it is purely a VARIABLE, it is never fixed.
So, when people say that in order to justify Alberta oil sands, SELL PRICE must be at least $80/barrel because COSTS are $50/barrel, that is purely propaganda.
What this means, is that all humans involved with Alberta oil sands DEMAND $50/barrel, but it shouldn't be a problem that if the market asks for $50 sell price.
It all depends on whether all humans down the chain will accept a lower income, that's it. It is simply a matter of ACCEPTANCE.
In general, PRICE AFFECTS COSTS, NOT VICE VERSA.
That's it. It is that simple.
ALL COSTS ARE LABOR COSTS
MARKET PRICE AFFECT COSTS, NOT VICE VERSA
People, think about, it, just think
What is cost?
How much does one lbs of tomato cost?
Answer: $2
Wrong answer; tomato is for free, tomato doesn't need to get paid
It is the HUMAN producing the tomato who wants to get paid. That is the cost, what the human demands.
Let's take crude oil as example.
Current price is $94/barrel. What does this mean?
Well, it means that AS LONG AS THE EXTRACTION TECHNOLOGY EXISTS, every human involved from extraction (owner, driller etc) to refinery (owner, workers etc) to the gas pump (owner, workers etc) want to get paid. THAT IS THE COST.
Of course, the owner of the technology wants his cut also.
Crude oil in itself is for free from God (or Nature for the non-religious).
CONCLUSION
ALL COSTS ARE LABOR COSTS
So, when people say: Cost of 1 barrel of crude oil is $40, it means that the owner of the technology, the owner of the land, workers, from extraction to retail demand $40 per barrel.
So, since all costs are labor costs, it is purely a VARIABLE, it is never fixed.
So, when people say that in order to justify Alberta oil sands, SELL PRICE must be at least $80/barrel because COSTS are $50/barrel, that is purely propaganda.
What this means, is that all humans involved with Alberta oil sands DEMAND $50/barrel, but it shouldn't be a problem that if the market asks for $50 sell price.
It all depends on whether all humans down the chain will accept a lower income, that's it. It is simply a matter of ACCEPTANCE.
In general, PRICE AFFECTS COSTS, NOT VICE VERSA.
That's it. It is that simple.
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