Supply & Demand

This is the best thing I’ve seen explaining why gasoline prices are so volatile these days, and why prices will eventually start climbing again, and keep on climbing.

Gas Prices, Gas Gouging, Peak Oil, Elasticity, Supply Demand

10 replies
  1. Andrewp
    Andrewp says:

    Very nicely done.

    Had a friend who, firmly tounge-in-cheek, said everyone needed to go out and buy the biggest SUVs they could right now. Help Detroit, and burn through the remaining fuel supplys faster so that we can finally say “no more oil — what do we do now?”. 🙂

  2. Eric
    Eric says:

    The sharp curve up shows an inelastic market. There is a reason for that and it has everything to do with government policies in place for the last 30 or so years.

    Like everything else that has happened in the last 30 years, it couldn’t last.

    A debtor nation loses production capabilities and opens it’s markets to imported manufactured goods while shedding medium paid jobs, meanwhile it continues to pay vast sums to maintain the largest standing Army and Navy in the world.

    I think that about sums things up.

    Any one of those things, when people complained about them, were told that they were “negative and crazy.”

  3. danc
    danc says:

    Very nice, are you are baffled by what is CDO (collateralized debt obligation) or how “leverage” works with banks:

  4. Andrewp
    Andrewp says:

    Owwwww!!! My head hurts!!!!!! 🙂

    Doing some interesting reading on “sustainability”. One of the propositions proposed is that we can’t and should not be living off of spending as the driving force of the economy. The authors feel that we’ve (as a whole nation) spent now aprox. 101-102% of our “income”. We are a debtor nation.

    They coined a term for our spending disease: “Affluenza”. I think it’s a pretty apt description of the situation …..

    But hey!! What does this have to do with bikes? Maybe ….. maybe instead of buying the latest/bestest bike that cost serious $$, it would be better to fix up bikes that are already available at much cheaper $$ ……….

    OOOhh, now my head is really hurting …. 🙂

  5. Eric
    Eric says:

    The bottom line is that a country can’t keep sending a fourth of what it earns to the sheiks of araby and expect nothing to happen. This, among other things, has been going on for over 30 years and people warned that it couldn’t go on forever.

  6. Mighk
    Mighk says:

    “A fourth of what we earn” is a highly inflated number. American’s spend roughly a quarter of their wage earnings on transportation. Gasoline is modest portion of that; certainly less than half. Only about 15 percent of our oil comes from the Middle East, and oil is only about 40 percent of the cost of a gallon of gas.

  7. Eric
    Eric says:

    Gasoline isn’t the only expense:
    Petroleum based fertilizers.
    Plastics, diesel and heating oil.
    Jet fuel.

    It adds up.

  8. Mighk
    Mighk says:

    We import about 7.5 million barrels of oil a year from the Persian Gulf. (We use about 7.7 BILLION barrels per year total.) At $100 per barrel that works out to $250 per year per individual American.

    Total oil imports are about 3.6 billion barrels per year. At $100 per barrel that’s $1,216 per person per year.

    For the Persian Gulf oil though, we need to add in the military expense of “protecting our oil that was mistakenly placed under their sand.”

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