BodybyFisher Posted June 21, 2008 Report Share Posted June 21, 2008 In college and post college studies, I crossed paths with supply and demand and the supply/demand curve. Ebay is built on Supply and Demand, common things are selling for pennies and rare IN DEMAND items are driven up in price. When things are rare, say a 1962 Corvette Split-Window couple, they sell for more. Anyone notice what has happened to the price of SUVs lately? Anyone notice that GM and FORD have postponed/suspended production of SUVs and pick-ups? NO DEMAND. Why haven't our representatives in DC learned about SUPPLY and DEMAND when it comes to OIL prices? I am sure that WE are all familiar with it but, here is a quick primer on Supply and Demand, look at what happens to the supply and demand curve when supply is increased (under supply curve shifts) <a href="http://en.wikipedia.org/wiki/Supply_and_demand" target="_blank">http://en.wikipedia.org/wiki/Supply_and_demand</a> This is a good article also >> <a href="http://www.theoildrum.com/node/2899" target="_blank">http://www.theoildrum.com/node/2899</a> Nowhere is this clearer than in the study of the results of the 1970s oil shocks. In the US the government responded by introducing a 56mph national speed limit, and mandating strict new efficieny standards. In 1975, the average American new car had 136 horsepower under its hood; by 1982, that number had fallen to under 100. Consumers shifted to more fuel efficient cars (a boon for Japanese makers, and a bane for Detroit), and the demand curve moved to the left. Similarly, electricity generators chose to build nuclear or coal-fired power stations rather than oil-fired ones. EDF, France’s national generator, now supplies the vast majority of its electricity from nuclear power stations. In the three years following the first oil shock in 1973, oil consumption continued to rise – despite soaring prices. Yet from a peak in 1976, consumption began to fall, dropping eventually 15% from its highs. And, again, consumption continued falling for three years, even after oil prices peaked in 1980 and after the world economy began recovering. Moves towards energy efficiency and towards alternative power sources are slow to ramp up, but their effect on the demand curve cannot be over-stated. Rising prices had another effect in the 1970s, they spurred investment in exploration and production in areas that had previously not been cost efficient. Building rigs in the hostile waters of the North Sea, or in the wilds of Alaska, made little sense while Saudi crude was available for $3 a barrel. But if the Saudi’s oil was restricted, and the price had shot up north of $30, then a lot of new oil suddenly became competitive. And because the key expenses are upfront – building the infrastructure in the first place – then once the new oil came on stream then it was unlikely to be removed, irrespective of the price of oil. The oil supply curve moved to the right. The impact of a supply curve that moved right (more supply at any given price), and a demand curve that moved left (less demand at any given price) was a collapse in the market clearing price. By 1985, the oil price had fallen back to $10. On an inflation-adjusted basis, oil was as cheap as it had been before the 1973 oil shock. The lesson here is simple: there is no “over” or “under” supply, there is only the price at which the market clears. And over the long-term, high oil prices will tend to encourage consumers to either reduce energy consumption or shift to other forms of energy. Similarly, investment in either inhospitable areas or in developing technologies will result in greater quantities of oil or synthetic crude coming on to the market. Each boom in the oil price sows the seeds of its own destruction. THE ANSWER? START DRILLING!!!!!!!!!!!!!!!!!! GET MORE SUPPLY, CHINA and INDIA have increased DEMAND, we/the world needs to MEET that demand... Pre-1995 - DTC codes OBD1 >> 1996 and newer - DTC codes OBD2 >> https://www.obd-codes.com/trouble_codes/gm/obd_codes.htm How to check for codes Caddyinfo How To Technical Archive >> http://www.caddyinfo.com/wordpress/cadillac-how-to-faq/ Cadillac History & Specifications Year by Year http://www.motorera.com/cadillac/index.htm Link to comment Share on other sites More sharing options...
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