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$114/bbl oil

Just thinking said:
Funny thing ... we don't seem to be using any less of it. Not because of price, but because it would seem to me that we should be using less due to supply limits, yet there seem to be none.
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Oil supply (production) has not declined. It's a forecast. (And it's been a forecast for a while). Price increases slow demand relative to what the demand would be without them--but they don't necessarily reduce demand from what it was before. And demand is increasing because of world economic growth and wealth, and in particular, where the growth is concentrated.

Look what's happening to food in some places, prices have increased quickly due to reduced supply. Result, less food on the shelf.
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Less food on the shelf where? I think there is as much food as people want (are able) to buy. This is not a famine. However (and what you may have meant) it is resulting in malnutrition--in some places quite extreme.

Is there any hint of less gasoline at the pumps? Oil for your home? Fuel for jets? It seems if you got the $$$$ we got the oil --- no matter how much you want.
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You could say that about any market-clearing price for any item.
 
Dymanic said:
And all those barrels of oil you didn't use are now sloshing around in SUV's.
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Right ... and they're still there none the less.

It's a bidding war. The tanks don't run dry because the losers don't show up. They take the bus; walk; whatever. If gas was fifty dollars a gallon, there would still be takers. The pure status value of driving would be enormous.
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OK, but I was referring to the underground tanks at the gas stations. Nowhere have I seen stations turn away anyone because they were waiting for their allocated supply. I have seen (on the news) empty shelves where once there was an abundance of certain foods.
 
Just thinking said:
I have seen (on the news) empty shelves where once there was an abundance of certain foods.
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Where though? If you are referring to places like Bangladesh--it's because (tragically) fewer people can afford the food, so it will not get stocked. If, say, they were given a big subsidy then the food would be available.
 
Francesca R said:
Oil supply (production) has not declined. It's a forecast. (And it's been a forecast for a while). Price increases slow demand relative to what the demand would be without them--but they don't necessarily reduce demand from what it was before. And demand is increasing because of world economic growth and wealth, and in particular, where the growth is concentrated.
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So why the panic increase in price if supply keeps up with demand?

Less food on the shelf where? I think there is as much food as people want (are able) to buy. This is not a famine. However (and what you may have meant) it is resulting in malnutrition--in some places quite extreme.[/Quote]

How about this? The rapid increase in price is a direct result of supply.

You could say that about any market-clearing price for any item.
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I'm not quite sure what you mean, but it doesn't seem to apply as it does for other items ... even in the futures market.
 
Just thinking said:
So why the panic increase in price if supply keeps up with demand?
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Supply is not keeping up with demand. I never said it was. But it is (still) increasing.

How about this? The rapid increase in price is a direct result of supply.
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Yes, but the product seems to be available if you can pay.

I'm not quite sure what you mean, but it doesn't seem to apply as it does for other items ... even in the futures market.
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I mean to a good approximation, if you are offering the clearing price of [Good X] then some of it will appear, as if by magic (or rather, an invisible hand)
 
Francesca R said:
Supply is not keeping up with demand. I never said it was. But it is (still) increasing.
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I haven't seen rationing at the pumps ... have you?

Yes, but the product seems to be available if you can pay.
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Sorry, but no. Rationing has taken place with some foods.

I mean to a good approximation, if you are offering the clearing price of [Good X] then some of it will appear, as if by magic (or rather, an invisible hand)
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It depends on the goods ... I wouldn't agree 100% with this.
 
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Francesca R said:
OK. Rationing is an alternative to price hikes, and appears to be a (voluntary) business strategy of the trading concerns cited here.
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Voluntary? I think they're rationing because the supply isn't there. They would fill their shelves if they could, just as they did in the past. Plus, even with rationing, the price is higher.
 
Sorry I think we're going around in circles. :)

Supply and demand are elastic; prices respond to changes in them, rationing alleviates the price impact of supply/demand fluctuations.
 
Just thinking said:
...It seems if you got the $$$$ we got the oil --- no matter how much you want.
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That is the truth!

The reason is that some "stripper" wells cost so much to extract that they only are put into production when the price goes way up. Current prices have caused people to invest in stripper kit for wells they had previously written off.

In a very real sense we will never run out of oil, therefore, but the price will rise and rise and rise until nobody can afford to burn it.
 
With inflation and tax increases, the gas that cost about .50 a gallon when I was kid should now cost about 3.25 a gallon. Perhaps a more interesting question than why is it so high might be why isn't it higher?
 
The Central Scrutinizer said:
Out of curiosity, why are you (and so many others) obsessed with oil (and, by extension, gas) prices?
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Because everything in this country moves by road and rail and canal, and all of the prime movers in those modes at present burn the stuff. And electric power is about 40% oil-fired.

Hence the price of everything is directly effected by the price of oil.

And were there not to be enough, an actual shortage, the consequences would not be pretty.
 
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The Central Scrutinizer said:
Out of curiosity, why are you (and so many others) obsessed with oil (and, by extension, gas) prices?
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I am because my business is directly affected by gas prices. Traveling to job sites is a nice chunk of my budget. On the other side of that coin, I have to be careful not to outprice myself out of a job to make up the difference. I'm really pushing the boundaries of closing up shop if gas gets near $4. That means I'm looking for a new job and the people who rely on me for income are looking for a job.
 
Tailgater said:
I am because my business is directly affected by gas prices. Traveling to job sites is a nice chunk of my budget. On the other side of that coin, I have to be careful not to outprice myself out of a job to make up the difference. I'm really pushing the boundaries of closing up shop if gas gets near $4. That means I'm looking for a new job and the people who rely on me for income are looking for a job.
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Where I live a number of lawn service providers have seasonal contracts that do not include rising fuel price surcharges. Plus my mom has a contract that requires she only pay so much per gallon for oil over the next 12 months. These type of businesses will be hurting too, no doubt.
 
Mister Agenda said:
With inflation and tax increases, the gas that cost about .50 a gallon when I was kid should now cost about 3.25 a gallon. Perhaps a more interesting question than why is it so high might be why isn't it higher?
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Yeah, for many years I've heard about $4 or $5 per gallon in Europe and wondered why we were paying much less.

Economists--Will we ever go back to $1.50/gallon? Is this a momentary "crisis" or a long-term correction?
 
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