Reply to: Russia cutting off oil?

[Incognito]

Supply and demand can never be equal when it comes to oil. Opec deliberately manipulates the supply of oil into the energy markets. It is not in their interest to match the demand for oil as this would then reduce the cost of oil.

Linky

[AtW]

Also, I do not seem to remember a time when I was ever called chappy, and then stayed around for more.

Apologies Sir...

I did want to get the steady-state view understood first, before going to the open system equilibrium.

You, Sir, made an absolute statement that was absolutely incorrect.

I tried to help you out with Porsche example but you moved the wrong way - now deal with Wii case please: when it was released demand greatly exceeded supply and did so for a long time. How does that fit into your theory of demand always being equal to supply? It almost never equal - even for commodities prices for which move up and down (these days mainly up).

You might want to read up this book - I think it is the one we used in Uni, yes Russian 101 Uni used foreign book.

[expat]

So expat's economic claim is patently wrong as illustrated by 2 examples that I provided.

I did want to get the steady-state view understood first, before going to the open system equilibrium.

Also, I do not seem to remember a time when I was ever called chappy, and then stayed around for more.

[AtW]

When demand exceeds supply prices go up

In a perfect market that exists in school books - yes. In real world companies can't easily increase price - look at Wii example, they could have increased price 50% and still sell as many, yet they could not really - so a lot of people did not get to buy them, in this case demand (with ability to pay) greatly exceeded supply. I wanted to use that example first but then I thought I'd lay down Porsche trap instead, how is your Mondeo btw?

So expat's economic claim is patently wrong as illustrated by 2 examples that I provided.

[DodgyAgent]

The point is in this case demand greatly exceeds supply. expat makes school-boy error thinking that the actual amount of sales is the point of equilibrium - this happens only in perfect market where price would increase to cut off demand (or supply), this does not happen in real world - when Porsche releases new 911 and gets bigger demand than planned (or maybe they plan to have lower supply than demand) then they don't jack up prices at factory to cut off demand, that's the job of speculators.

When demand exceeds supply prices go up, all the tinkering that goes with it is all part of the equation that creates the equilibrium of the markets. Speculators are as much a part of the market as the oily rags who build the cars and the even oilier rags who sell them

[AtW]

That's the market for you

The point is in this case demand greatly exceeds supply. expat makes school-boy error thinking that the actual amount of sales is the point of equilibrium - this happens only in perfect market where price would increase to cut off demand (or supply), this does not happen in real world - when Porsche releases new 911 and gets bigger demand than planned (or maybe they plan to have lower supply than demand) then they don't jack up prices at factory to cut off demand, that's the job of speculators.

[DodgyAgent]

No chappy, demand (with money to pay) for some Porsches can be much higher than supply - that's why people have to queue for new models for many months and often pay over the market price to those who were ahead of the queue. This is just one example when demand was much greater than supply.

That's the market for you

[AtW]

Expat's view is one of simple economics which you should really understand.

Well old chap, I risk to differ - I know economics pretty well, perhaps not as well as scumbags rulers of Russia, but I was wrong about those for some time too and without talking about it and trying to understand I would not have reached the enlightenment that I had about Putin and his scumbag friends some years ago. Note here - I was talking and thinking about economics even before anyone heard of Putin.

[AtW]

Yes. The demand for Porsches is rather low (the wish for one may be widespread, but that is not demand). The demand would be higher if the price were lower, but it isn't.

No chappy, demand (with money to pay) for some Porsches can be much higher than supply - that's why people have to queue for new models for many months and often pay over the market price to those who were ahead of the queue. This is just one example when demand was much greater than supply.

[expat]

Do you think that supply of Porsches equals demand for them?

Yes. The demand for Porsches is rather low (the wish for one may be widespread, but that is not demand). The demand would be higher if the price were lower, but it isn't.

[DodgyAgent]

Do you think that supply of Porsches equals demand for them?

AtW having impressed on your analysis of Russia in the context of their invasion of Georgia you are now reverting to your old ways (of arguing black is white and refusing to back down) where logic and commonsense no longer prevail. Expat's view is one of simple economics which you should really understand.

[TimberWolf]

Supply is always exactly equal to demand. If supply decreases, then the price goes up, and the demand therefore goes down; until they reach equilibrium: with demand = supply (and a higher price, BTW).

Yeah, I vaguely remember that from 'O' level economics, one curve goes one way and the other goes the other, and where they intersect are said to be equal. Tell a starving African that supply always equals demand.

Energy is a kind of fundamental currency. With it you can buy or produce anything and it also costs energy to produce energy. I think something like 1 joule of energy is used to create 30 joules of energy from oil and this cost is rising as oil gets harder to find. [It takes something like 100 joules of oil energy to supply 1 joule of energy in the form of food, and much more for meat]. Oil is a finite resource, and energy is something we can't do without. If we don't find another cheaper source of energy (doubtful, short of nuclear) then the real cost of energy (in energy) will rise and people might die before supply=demand.

[AtW]

Supply still equals demand.

Do you think that supply of Porsches equals demand for them?

[expat]

...snip snip snip ...
Oil in large part is controlled by a non-market entity like OPEC - the market in large part is rigged by them. Demand did not increase that much to justify 10 times increase in prices, just like with houses in the UK. It's a bubble.

Yes, of course it's a bubble inflated by cartels and speculators. Supply still equals demand. Amount of oil potentially available didn't change. Real requirement for oil didn't change. These 2 things are not "supply" and "demand".

[swamp]

Господен Белки,

Почему вы уехаль Pуссиe?