Mittwoch, April 27, 2011

Still missing the point...


I guess I'm blessed by not having to watch shows like this, as the righteous ignorance would drive me up a wall.

The price of oil is a function of market prices: supply and demand.

Nothing more, nothing less. Oil is, for the purposes under consideration here, fungible: there are several key places where the oil prices are recorded, from oil from the North Sea to Saudi Arabia to Siberia. Oil prices have futures because companies want to lock in supplies and prices for business purposes.

The price of oil, as a function of supply and demand, is dependent on both supply and demand: if supplies are tight, prices go up. Right now, supplies are not tight.

It's a function of demand. The world is, economically speaking, no longer a duopoly - the US and the EU - but has added a major player in terms of oil demand: Emerging Asian countries, largely India and China, but also including a slew of countries that are starting to transcend poverty.

Hence, Whoopie: you're pissed that a bunch of Chinese and Indians are using the oil that you want to use. To adopt her vernacular: Get used to it, Girl.

She asks the question "Why are they doing this to us?"

The answer: they aren't doing that to you. They're just doing it.

And Jim Avila: "There is really no rational reason for the prices to be so high"? Really? That's your answer? Take a look at world demand patterns and don't tell me there's no rational reason for the prices to be high.

Guess what: they're not going to go down. Too much international demand. The days of cheap oil - and I remember filling up a 20 gallon tank of gas for what it now costs per gallon ($5), back around 1974 - are long, long, long over. Get used to it.


Supply and demand: it's not just a good idea. It's how the world works.

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