Supply & Demand - Who's not getting their oil?

Couve · Coal Joined: May 30, 2008 Posts: 10

Can someone help me understand this?

Under typical supply and demand rules where the supply is limited there is always a "loser". But whos losing? (no cracks about the consumer)

Seriously, If we have only 5 barrels of oil to sell and 6 customers the bidding goes crazy until we sell the 5 barrels but the low bidder gets nothing. Thats the nature of limited supply.

But from what I'm seeing is everyone is still getting their oil/gasoline/diesel but albeit at crazy high prices...

BUT EVERYONES ORDERS ARE STILL GETTING FILLED!

So how can supply and demand cause these kinds of runups when demand is being met?

jdmartin

I'd bet you don't live in a third world country where electricity generation went from 16 hours to 8 hours per day. Or that the lines for gasoline went from a few cars to a few miles.

Everyone in the Western World, China, etc is getting their oil because they can still afford to pay for it. The people that aren't getting all their oil is the ones that can't afford to pay for it. Simple math, really:

You have $100 available and oil costs $1/bbl. You can buy 100 bbls, assuming there's enough unused oil to sell it all to you.

You have $100 available and oil costs $10/bbl. You can buy 10 bbls, assuming there's enough unused oil.

You have $100 available and oil costs $100/bbl. You can buy 1 bbl.

This, in essence, is what's happened. Prices have risen to allow the market to price out of existence the demand from the people that do not have access to more money, thus bringing demand=supply back into favor. The people that can afford $100 oil want to make sure they get their oil, so they're willing to pay $100.
_________________
After fueling up their cars, Twyman says they bowed their heads and asked God for cheaper gas.There was no immediate answer, but he says other motorists joined in and the service station owner didn't run them off.

basil_hayden

Welcome to po.com.

Do a search on this website for shortages and you will find numerous examples of who is not getting their oil.

Electric_Economy_2025 · Heavy Crude Joined: Apr 01, 2008 Posts: 139

JoeW

canis_lupus

Welcome!

The price of oil is the filter of who gets oil and who doesn't. Simply, those who can't afford it aren't getting it.

Look for articles like this one:

As fuel prices soar, a country unravels

KingM

It's not just a question of not being able to pay the price, it's a question of not being willing to pay the price, either. For example, gas is still a relatively small part of my budget, but I've cut my driving by 100-200 miles a month, which is about 5-10%

kpeavey · Expert Joined: Oct 04, 2004 Posts: 1125

orders are filled because those who can not afford it are not ordering it.
_________________
If you want a picture of the future, imagine a boot stamping on a human face--for ever."
-George Orwell, 1984

______________
Accept the Facts.

TheDude

rockdoc123 · Light Sweet Crude Joined: May 16, 2005 Posts: 1667

I think you are all missing the point of his question. Certainly some people are doing with out because of high prices....that doesn't mean that all of the oil has been bought up. You have to make the assumption that oil price is tied exactly to demand to arrive at that. If in fact a goodly chunk of the price is actually speculation driven then there is no reason why you can't have high prices and a lot of oil floating around in the system.

what he is really asking is find an example of someone who is willing to pay 135/bbl but can't find anything to buy.

Troyboy1208

joewp

OilFinder2

eastbay

We just had two young girls knock on our door. It's now 7:38 pm. It wasn't 15 minutes ago. They were asking for aluminum cans and weren't from this area.

I asked them where their mother was and they pointed at an SUV parked a few houses away. I asked them what they were collecting the cans for and they said, 'I dunno. Our mom told us to ask all the people on this street for cans.'

I have a very strong suspicion it's for gas.

That lady sitting in the SUV isn't getting her gas. But she's now begun trying really hard... or at least her kids are.
_________________
Everything is Impermanent. Shakyamuni Buddha

Denny

The Denny household is not getting as much oil. It was interested in buying a lot of oil at $0.90 a litre, but its been finding other alternatives lately at $1.24. Some days Dad has been riding a bike to work, as well as short distance errands. Sometimes, Dad rides with Mom in her car if he's working in Toronto that day, and takes the subway the rest of the way. And, Denise junior has been told she's taking the bus to the mall, not driving.

So, this family has been using about 70% of its oil use of a year ago.