Comments on: Gas Prices, Gas Gouging, Peak Oil, Elasticity, Supply Demand

By: sunstorm007

sunstorm007 — Sat, 17 Jul 2010 13:24:05 +0000

Actually supply and demand does just that, set prices. There is an equilirium price at which a comodity will be supplied and a price at which it will be bought. Firms cannot stray too far off the mark of the equilibrium, or they simply will not sell anything, as long as there are alternative suppliers (competition that is). Profit Maximization dictates that firms do not artificially jack up prices, if they do they will lose revenue.

By: newculture

newculture — Sat, 17 Jul 2010 13:03:10 +0000

Thanks, I haven’t seen anything like this before, so I think its a useful tool.

By: zappos49

zappos49 — Sat, 17 Jul 2010 12:12:22 +0000

Oil is expensive also because our dollar is falling in value so we have to pay more for a barrel of oil.

VOTE RON PAUL

By: newculture

newculture — Sat, 17 Jul 2010 12:01:56 +0000

Or perhaps the dollar is falling in value because the oil is less available.

Peak oil will not change based on who is in office.

Mr. Paul certainly does have some interesting thoughts on tax and monetary policy, but won’t necessarily make him effective in dealing with the consequences of peak oil.

By: zappos49

zappos49 — Sat, 17 Jul 2010 11:22:20 +0000

Yes, this problem is two fold. One is simple supply and demand, but also the US dollar is less valuable compared to other currencies buying power and buying commodities like oil. Prices of oil have not gone up so much compared to other currencies.

By: lakesideguy2009

lakesideguy2009 — Sat, 17 Jul 2010 11:11:52 +0000

can one of you einsteins out there please explain why bush has not released some of the strategic oil reserves?

By: newculture

newculture — Sat, 17 Jul 2010 10:27:41 +0000

Why would he?

We want the the Strategic Oil Reserves in the event that people are freezing to death due to lack of heat, or are starving to death, due to the tractors being idle.

Or, we want that so that we can have it for the military.

Either way, there is absolutely no reason to use it now. That oil will not slow down the rate that oil is going up, or that gas is going up, other then for a few months at most.

Peak oil is simple: increasing demand + fixed supply = price goes up.

By: fishing1861

fishing1861 — Sat, 17 Jul 2010 10:05:29 +0000

One thing your forgetting though is oil is an inelastic commodity. Unless an alternative energy source is found that can compete with oil it is unlikely for demand to significantly decrease. So in short it is doubtful that prices will fall unless more supply is brought online which is also unlikely. Which is also unlikely. So high prices in my opinion are here to stay.

By: milofonbil

milofonbil — Sat, 17 Jul 2010 09:35:24 +0000

After peak oil, the supply curve must change so that it is steep (ineleastic) no matter what the price level since there is not anything that can be done to meet the demand. Production continues to decline although it’s at maximum.

By: milofonbil

milofonbil — Sat, 17 Jul 2010 08:36:01 +0000

The strategic oil reserve is 570 million barrels. The us uses 21 million barrels a day. There is not even three weeks worth of reserve. Let’s not tap into it unless there is an embargo or something. Bush has not told you to cut back on your driving either. Wonder why?

By: genxr65

genxr65 — Sat, 17 Jul 2010 08:24:22 +0000

The thing is, there isn’t any competition for oil. The demand will be there (and increase) as long as we do not develop alternative sources of energy that can replace it. We are no doubt in a monopolized market and that is one reason priced go unbridled. Even if technologies are developed it won’t happen overnight because of the major expense and logistics of creating an entirely new infrastructure for a different fuel supply. In short, we are screwed until we embrace hydrogen, electric, etc.

By: brighterplanet

brighterplanet — Sat, 17 Jul 2010 08:16:51 +0000

nice video. It does frustrate me to hear politicians rallying behind the opening of our reserves, or allowing offshore drilling when they not once mention conservation!

By: newculture

newculture — Sat, 17 Jul 2010 07:55:34 +0000

Radical conservation and curtailment will certainly be necessary if we hope to keep things functioning as we transition to a lower energy future. The book “Plan C” by Pat Murphy goes in depth on a lot of the ways in which to do this.

By: ibphotos

ibphotos — Sat, 17 Jul 2010 07:05:32 +0000

Here’s how to vote for oil independance. Re-fuse to buy a vehicle that uses fossil fuel. This will send the most direct message to the Detroit (and other) auto makers. ONe year of no sales at all will insure that the next year there’s efficient electric vehicles on the road. A large pecentage of our oil consumption is in individual vehicles. This is my foremost goal right now. I own a 6cyl 4.3L Van. I need a 6cyl 4.3L Van about 10% of the time. Next major purchase, an electric car.

By: devine122

devine122 — Sat, 17 Jul 2010 06:58:08 +0000

supply and command is pretty easy to understand, you supply the oil, you command the money

By: chansherly212

chansherly212 — Sat, 17 Jul 2010 06:41:53 +0000

in the long run… that is in the very long run, maybe about a 100 years or so, we are going to have to find new sources of energy, such a volatile economy is devastating, peak oil is eventual, and the adjustment to renewable source of energy will be painful..

By: newculture

newculture — Sat, 17 Jul 2010 05:43:44 +0000

Of course no buying cars -> no economic system -> no money -> no food. Puzzler, isn’t it.

By: newculture

newculture — Sat, 17 Jul 2010 05:35:54 +0000

There are no “new sources” of energy. We know all of the sources of energy 1. from the sun, 2. stored fossil energy, and 3. stored heat energy / nuclear

Peak oil is not eventual, peak oil is already here, it is what caused the collapse of an economic system made fragile by very poor understanding of how energy and money relate to one another.

By: lorax2013

lorax2013 — Sat, 17 Jul 2010 04:54:03 +0000

Very prescient – I’ll bet T. Boone wishes you had been advising him.

By: newculture

newculture — Sat, 17 Jul 2010 04:10:33 +0000

Probably not. Just because I understand the supply and demand situation doesn’t mean I fully understand the interactions with the economy. I was in basically the same position Pickens was in when the price began to fall.

The amount of supply, and the long term decline of supply, is much easier to predict than when the demand will fall.

It would be worthwhile to make a similar video which illustrated what specifically happened in 2008, including the collapse of the economic system.

By: gazzyjeanne

gazzyjeanne — Sat, 17 Jul 2010 04:03:07 +0000

Nice presentation. There was a link to it in an article posted on “theoildrumm” this week, which you might find informative.
You could have titled your video “Why the depression will never end.”

By: newculture

newculture — Sat, 17 Jul 2010 03:48:24 +0000

Thanks, I wrote a piece on my LiveJournal a week or so ago which had a very similar title, “Why this recession may never end.”

I’ll look up the Oil Drum article.

By: mikedilger

mikedilger — Sat, 17 Jul 2010 03:32:34 +0000

Good use of supply and demand curves. The market will always be volatile. Prisoner’s dilemma type games make it inevitable that producers will oversupply, crash, then undersupply, and the price will always yo-yo. But the idea expressed in comments that mankind is on a permanent downhill is ludicrous. Many other sources of energy present themselves and have not been exhausted.

By: jpcash11

jpcash11 — Sat, 17 Jul 2010 02:55:26 +0000

Amazing. This guy predicted what was going to happen a year before it happened.

By: newculture

newculture — Sat, 17 Jul 2010 02:46:23 +0000

Not exactly. I basically knew that it was going to happen, but didn’t expect it to happen so soon. I didn’t realize the financial system had become so fragile, or that it was that close to collapse.

Additionally, the above presumes that the demand will eventually stabilize and recover, but a total collapse of the global economy would prevent that, and we may already be in a self-reinforcing downward spiral.

Time will tell.