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Posted: 4/28/2011 7:44:53 PM EDT
correct me if im wrong but if you slow production to decrease supply to increase prices,  thats still using supply and demand?
Link Posted: 4/28/2011 7:45:47 PM EDT
yup, whats the context of the issue you're working
Link Posted: 4/28/2011 7:47:47 PM EDT
[Last Edit: 4/28/2011 7:47:56 PM EDT by Cypher15]





Originally Posted By BobRoberts:



yup, whats the context of the issue you're working



OPEC decreasing production of oil on the market to raise prices.





 
Link Posted: 4/28/2011 7:51:40 PM EDT
thats the basic definition of supply vs demand.




Link Posted: 4/28/2011 7:53:07 PM EDT
Exactly what else would you call it?
Link Posted: 4/28/2011 8:03:22 PM EDT
Yup that's one way of looking at it.

The other way is that demand outstrips supply and prices go up.

If we had more domestic oil supply, prices wouldn't be as high.
Link Posted: 4/28/2011 8:05:55 PM EDT
Opec is putting the screws to us at the moment. Why do you think Barango released the certificate. Focus shift. The tragic recent weather distruction will give him even more time to bumble around. It could be the begenning of the start of the possum.
Link Posted: 4/28/2011 8:08:49 PM EDT
Harley Davidson economics.

Decreasing production to reduce supply and drive prices up is only feasible when competition does not exist.
Link Posted: 4/28/2011 8:38:26 PM EDT
Originally Posted By Kuraki:
Harley Davidson economics.

Decreasing production to reduce supply and drive prices up is only feasible when competition does not exist.


Yep, this is how monopolies work. In a competitive free market, if one supplier raises their prices, then you go to their competition.
Link Posted: 4/28/2011 10:49:42 PM EDT
[Last Edit: 4/28/2011 10:54:58 PM EDT by Cypher15]
check this out:





Supply is what is available. Production
determines supply, in the case of a commodity, so long as there are
available crude sources. Unlike farmers, who may not always yield great
crops due to fluctuations in the weather, those that own oil
derive it easily, and at a great profit. It is costly to drill a new
well, and so while a well exists, it is stretched out as long as it can
be––as you said, farmers decrease supply to increase prices. The owners
of crude oil do this by choice, rather than due to the weather. So long
as they feel they need more wealth, they will drive up the price of oil.
Since times are difficult everywhere right now, they feel they need
more wealth. And so, we suffer for whimsy. Yes, speculation can be
manipulated in favor of lower prices, but the threat of competition is
not enough to create stability. Unfortunately, unless it were
socialized, domestic drilling would only go into the pockets of oil
companies and not serve to benefit the American people. Truly socialized
oil will not happen.



oh, and the kicker?  hes a registered Republican



 
Link Posted: 4/28/2011 10:56:28 PM EDT
[Last Edit: 4/28/2011 10:59:52 PM EDT by BobRoberts]
sorry, did not know you were quoting another.

Link Posted: 4/29/2011 4:46:24 AM EDT
....this would be true if there was a shortage of oil, like we had in the 70's.  Oil is being produced at a rate it is being consumed and there are only so many places you can store it. OPEC doesn't need to cut production to raise cost, they just need to agree to raise the price.    With that, if it's true, we get most of our oil from Mexico and Canada so someone explain why that is so high????
Link Posted: 4/29/2011 7:44:13 AM EDT
Its simple, oil is fungible. Even though our oil is from Canada, we must pay the prevailing price because the seller could just as well sell it on the open market and make more. I think there is a misconception that oil prices are set by a magic ferry. It just consists of the mean aggregate of the buy and sell orders out on the market.
Link Posted: 4/29/2011 7:58:46 AM EDT



Originally Posted By BBoyd:


....this would be true if there was a shortage of oil, like we had in the 70's.  Oil is being produced at a rate it is being consumed and there are only so many places you can store it. OPEC doesn't need to cut production to raise cost, they just need to agree to raise the price.    With that, if it's true, we get most of our oil from Mexico and Canada so someone explain why that is so high????


I think they do actually limit supply to raise prices.  Somehow OPEC decides quotas for each country to produce.  That is why it doesn't always work, some countries try to cheat and produce more and it causes the price to drop some.
 
Link Posted: 4/29/2011 8:02:51 AM EDT
Originally Posted By valhalla:
Originally Posted By Kuraki:
Harley Davidson economics.

Decreasing production to reduce supply and drive prices up is only feasible when competition does not exist.


Yep, this is how monopolies work. In a competitive free market, if one supplier raises their prices, then you go to their competition.


No no no, there is plenty of competition.  What you're missing is that there is a ceiling on production.  If OPEC dropped off the earth tomorrow, there would be no way to make up the loss by the other producers.  There is competition, but no one entity can supply all of the demand.  When OPEC lowers productions, prices go up, as other producers cannot increase production to match demand.

Also, there is a floor to how little oil and gasoline (and other petrolium products) a person can use before they can't (aren't willing to) reduce consumption any more, and so they start cutting back in other areas to free up funds.
Link Posted: 4/29/2011 8:08:47 AM EDT
Originally Posted By Cypher15:
check this out:

Supply is what is available. Production determines supply, in the case of a commodity, so long as there are available crude sources. Unlike farmers, who may not always yield great crops due to fluctuations in the weather, those that own oil derive it easily, and at a great profit. It is costly to drill a new well, and so while a well exists, it is stretched out as long as it can be––as you said, farmers decrease supply to increase prices. The owners of crude oil do this by choice, rather than due to the weather. So long as they feel they need more wealth, they will drive up the price of oil. Since times are difficult everywhere right now, they feel they need more wealth. And so, we suffer for whimsy. Yes, speculation can be manipulated in favor of lower prices, but the threat of competition is not enough to create stability. Unfortunately, unless it were socialized, domestic drilling would only go into the pockets of oil companies and not serve to benefit the American people. Truly socialized oil will not happen.

oh, and the kicker?  hes a registered Republican

What percent of the world oil supply is controlled by corporations and what percent is controlled by state entities?

When you arrive at the answer to this question any notion about the ability for "oil companies" to engage in anything more than eking out a sub 10% ROI will be laid to rest.

If "big oil" has the stranglehold you think they do, shouldn't their profit margins be at least as high as Apple, who only makes toys and gadgets?
Link Posted: 4/29/2011 10:34:12 AM EDT
Originally Posted By GreyHat:
Exactly what else would you call it?


While there are several serious errors in the discussion above, probably this is the most egregious.  It's a management, i.e., an intentional reduction, of supply in order to increase prices.  Therefore the correct term would be "supply management."  It's definitely not pure supply and demand.

Yes, the term "supply management" could be construed as a euphemism, but it better describes what's happening.
Link Posted: 4/29/2011 12:23:13 PM EDT



Originally Posted By hardcase:



Originally Posted By GreyHat:

Exactly what else would you call it?




While there are several serious errors in the discussion above, probably this is the most egregious.  It's a management, i.e., an intentional reduction, of supply in order to increase prices.  Therefore the correct term would be "supply management."  It's definitely not pure supply and demand.



Yes, the term "supply management" could be construed as a euphemism, but it better describes what's happening.


if you are manipulating supply... is it not still a matter of supply and demand?



 
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