October 10, 2004

Oil for Food, and Oil Vis-a-Vis Food

WE HAVE SPENT much of this evening poring over the lengthy report recently issued by Mr Charles Duelfer, the Special Advisor to the Director of Central Intelligence on Iraq's Weapons of Mass Destruction. It is a fascinating document, and while we do not expect anyone to read all 918 pages in it, we do encourage people to look over Volume I's Regime Finance and Procurement section. Specifically Annex B, which has the nasty alleged corruption information. Read it closely if you get a free hour or so; it's fascinating stuff.

Our main thoughts this evening, however, deal with oil in a different way. We note with concern that the price of New York crude is now over $53 per barrel. To be exact, it is at $53.31/bbl, which at 42 gallons to the barrel, equates to roughly $1.27 per unrefined gallon.

This is rather expensive, and we are mildly annoyed about this. We liked things much better when there was an oil glut on the market and we could buy unleaded for next to nothing. We also liked things much better when hedge funds and speculators were not artificially boosting oil's price. But we recognize the market at work, and therefore we shan't complain about it. Besides, these high prices give us something to which we can look forward: namely, a really spectacular price crash in which the speculators get blitzed something fierce. Heh heh heh.

Still, despite the higher price of gasoline at the pump (we recently paid $1.94 per gallon, which bit), we have not really changed our driving habits. This is because fuel costs are a small percentage of our monthly outlays, and even if the price shot up above $2 per gallon, we would continue as normal. But there would be a point at when we would certainly cut back, and we hit upon that tonight.

We have decided that we will change our driving habits when the price of gasoline at the pump becomes more expensive than a commodity which we prize even more than gasoline: namely, Diet Cherry Coke. In our life, you see, Diet Cherry Coke is as much a necessity as gasoline, and it is surprisingly similar to petrol in other ways.

For Diet Cherry Coke is a "boutique" soda, in that it is a different formulation than regular Coke. There are supply concerns about Diet Cherry Coke, in that the few stores which carry it here in New Hampshire could run out at any time. And lastly, Diet Cherry Coke is a commodity which costs virtually nothing to produce, yet is sold for far more than its inherent value.

We can assure you that we pay between $2.50 and $3.79 for twelve 12-oz. cans of Diet Cherry Coke, which are delivered in Half-Case Fridge Packs. (There are no two-liter bottles of the stuff). This is an average cost of $3.15 per half-case. A half-case contains 144 oz. of Diet Cherry Coke, or 1.125 gallons, bringing the per-gallon price of Diet Cherry Coke to $2.80.

Now, the way we see it, Diet Cherry Coke is far more important to us than oil. It is far easier for us to get oil than it is to get Diet Cherry Coke, and while we could deal with shortages of oil, we can't really deal with shortages of Diet Cherry Coke. And lastly, oil isn't something which a monopoly produces; but our stock of Diet Cherry Coke is directly subject to the whims of the Good People at Coca-Cola. Should they decide to stop selling it, we are doomed.

So should the price of gasoline hit $2.80 per gallon, we would warn the oil firms that we're going to have to cut back something fierce on our driving. We are not going to pay through the nose for a commodity whose utility to us is outstripped by its cost. We'll apply our savings to buying Diet Cherry Coke in bulk. And who knows -- if we buy enough and we're lucky, perhaps we could even sign up for some kind of Diet Cherry Coke voucher program!

Posted by Benjamin Kepple at October 10, 2004 11:00 PM | TrackBack
Comments

While I disagree that anything diet could be precious to anyone, I see your point. How is Diet Cherry Coke a more expensive commodity than oil? Maybe we should start using it to run our cars. THAT would boost production in a hurry.

Posted by: Monique at October 11, 2004 12:25 AM

Relevance! Finally!

Yes, we feel your pain and understand your concern. Freshman year in college, we became addicted to Tostito's chicken-quesadilla cheese dip. It was the regular cheese dip, you see, with bit of chicken added to it. It was delicious, and brought a dimension to chip-dipping that heretofore did not exist.

A year later, however, we could no longer find the stuff in the stores. We e-mailed the company to find out where it was being distributed, and much to our shock, chagrin and dismay, we learned that Tostito's chicken-quesadilla cheese dip had been DISCONTINUED.

To this day, some six years later, we have not gotten over it.

The lesson: Buy your diet cherry coke in bulk, lest it ever disappear from the shelves!

Your friend,
Matt

Posted by: Matthew S. Schwartz at October 11, 2004 02:57 AM

Monique: I would certainly agree with you had I not become a diabetic.

Matt: I have four half-cases of Diet Cherry Coke stored in my back bedroom. That said, I can't for the life of me believe that you -- of all people -- were a voracious fan of chicken-quesadilla cheese dip.

Posted by: Benjamin Kepple at October 11, 2004 11:00 PM

I use a slightly different metric: Diet Dr. Pepper. Though in a pinch Diet Cherry Coke fills in....

Posted by: DCE at October 12, 2004 07:14 AM