There will be no oil shortage in free market economies

sirrom

i would just like to point out that there will be no widespread oil shortage in free market economies.

i seem to see lots of posts about rationing petrol/oil/oil products,but what people forget is that if there is low supply the price will go up and demand will be reduced,so there will always be oil for those that can afford it.
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RdSnt

That is of course if you regard the free market as a rational environment where everyone knows their place and accepts it. Very British.
You are depending on everyone knowing what's going on and understanding why there are shortages, staying calm, not hoarding, not striking, not rioting.
You are of course relying on the greed filled puss sacks that are the monied wealthy taking an equal hit and nobly making sure essential services are adequately supplied.
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RdSnt

What free market economies? I don't know of any. Each of the so-called first world nations interferes very deeply with their economies. Thus the international currency crisis, the subsidies for the wealthy, the trade wars, the fiat money printing, the stupid rescue of mortgage lenders, etc.....

Fishman

there will be no widespread oil shortage in free market economies.

What you are saying is correct in an economics class, seldom true in the real world. There can be no shortage if the price is high enough, it will be unavailable because of the cost. Politics and a multitude of other factors will creat their share of shortages.

Cynus · Intermediate Crude Joined: Aug 13, 2004 Posts: 594

I don't think most people are going to split hairs over the meaning of the word "shortage" vs. "can't get any because it's too expensive." For all practical reasons they amount to the same thing.
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Heineken

Sirrom, your assertion is nonsense, because it assumes that 100% of oil demand is elastic.

In fact, a very large proportion of oil demand is inelastic. It's baked into the continued functioning of civilization as we know it.

Thus, oil-demand destruction can go only so far before a different kind of destruction comes into play.
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DantesPeak

If oil were perfectly distributed around the world, and all countries had completely free markets, the high prices may theoretically stop most shortages.

Since many countries subsidize oil and oil products (which by the way, the US also does for ethanol), demand has a tendency to always exceed supply. So shortages are bound to result as oil production drops.
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LoneSnark · Intermediate Crude Joined: Nov 15, 2007 Posts: 508

A market can be considered free for as long as the right to contract is unencumbered. So, while the government subsidizes a lot of stuff, taxes a lot of other stuff, and mandates some things, the world-wide trade in oil is a free market (this has not always been so). Most countries don't even have import tariffs on the stuff.

That said, judging by the beliefs I have found on this board, when Peak Oil hits the first thing that will be sacrificed will be the freedom of contract. Restrictions will be placed on who you can sell too and at what prices, making it no longer a free market but instead an arm of the political system, as existed in 1970s America and 1930s Italy.

wisconsin_cur · Moderator Joined: May 10, 2007 Posts: 2918

Kingcoal

Peak Oil is the end of cheap oil, that's common knowledge. Oil will always have a price, however, eventually; even first world countries will find it not worth it.
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mark

The world has a short memory. Necessarily so given our limited lifespan; we think a 100 years is a long time. Taking the longer perspective is likely to provide greater clarity. It’s only a short 350 years that we’ve been on this carnival ride known as “modern” civilization. Why, given our million year existence, have we only now reached such dizzying heights that the delusional among us proclaim we’re about to partner with silicon. I’m guessing we’ve also reached peak idiocy.

If you can conjure up a vision of what the world is going to look like when slapped upside the head by resource scarcity, I want what you’re smokin’.

I’ve learned a lot here in the last 3 years but the more I learn the more I realize that I don’t know how things will work out. However, given the level of illusion amongst the people and the enormous criminality of our ruling class, I can’t imagine we will call it normal.
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aflurry · Intermediate Crude Joined: Mar 28, 2005 Posts: 822

as long as i can't afford to buy food, there's no food shortage. i won't starve. i sure do loves me some free markets.

LoneSnark · Intermediate Crude Joined: Nov 15, 2007 Posts: 508

As there is no point at which you cannot afford food (either you gave up spending your money on luxuries or those with money are supporting you through charity), what always gives in a food market is waste (people throw less food away), types of food (instead of feeding grain to cows to make meat people just eat bread instead) or the supply is more carefully handled (something like 1/6th of all the grain produced in America is lost in transit, with expense it could be saved).

wisconsin_cur · Moderator Joined: May 10, 2007 Posts: 2918