Is supply and demand driving up the cost of energy, or is inflation drving up energy cost?

Question

Prices go up for one of two reasons, supply and demand pressures or inflation.
Which in your opinion has driven up energy cost for the past few years?

Answer 1

For me, it is a clear cut case of inflation...affected by a combination of commodity price indecies and producer price indecies.

We know that there is a vast supply of oil...so the increase has nothing to do with the cost of producing or exporting. And I don't see that the demand has increased significantly, allowing a financial supply advantage.

Answer 2

They will tell you it is supply and demand but the supply is whatever it needs to be . Install another pump and increase the output . The oil is just sitting there doing nothing waiting to be pumped out . Understanding how oil prices can manipulate world markets is key to understanding the pricing models and did you check the price of oil futures 6 moths ago compared to todays oil prices . and what was happening then in the market . Its linked in such an inconspicuous manner that when we would see the value of the dollar drop substantially we jack the price of oil to prop it up artificially cause the dollar has no legs anymore . This is why oil prices are in such a wild state of flux all the time .
Its like opening and closing a valve all the time to regulate the pressure in a steam engine . More power need the higher you allow the pressure to build .The more money that is lost the higher the price of oil needs to go .
So the higher oil prices go the worse the economy is doing . Clintons last year or so saw gas at the pump go below a dollar a gallon . Or in many places 1.09/9 and this was due to a good economy .
Now we have a horrible economy and oil is the key to attempt to keep it from all crashing down on us .
Energy prices are manipulated and controlled to keep a balance .
When banks are desperate for capitol energy prices always rise rapidly .Its the only way to collect more money . Money is the coal in the steam engine that drives the economy .How do you get more money from everyone you can . Raise the price of the most commonly used commodity oil .

Answer 3

Actually the cost of energy is low considering the state of the world.
High energy cost make it more viable to pursue alternative energy which OPEC hates.

It costs Iran $20 to produce a barrel of oil. The Saudis, Kuwait, and the UAE it only costs $2 a barrel. Making it nearly impossible for Iran to turn a profit. The other OPEC nations have relied on foreign companies to pump their oil for them using the latest technological advances whereas the Iranian way is archaic and inefficient.
The Iranians pursuit of nuclear energy and nuclear weapons scares the hell out of other OPEC nations therefore they are helping us in the war on terror and have been steadfast allies so far. If Iran attains nuclear weapons they will be the dominant country in the Middle East and therefore OPEC and we can expect to see a gallon of gas to easily rise to $8 a gallon.(and they say the casualty list is high now). This is a direct threat to our economy and national security.

Inflation is low right now and our economy strong. People are traveling at unprecedented rates. Demand has the price up as always but don't ever forget the world situation and how it effects our gas prices.

Answer 4

The price for oil are going up because of a war in middle east and the fact that most of the suppliers went over the peek point of production as eg. Norway, UK, Saudi-Arabia (they just didn´t admit it yet), Alaska, Venezuela and Malaysia...
the price for gas is rising because it´s tied to the oil price...

this all is added by the rising energy consuption in US, china, India and east Europe (former soviet controlled countries)... so there are different reasons... a limited supply for the future and a rising demand...
the real rise will come in 2 years...

and the next point is homemade... the energy companies have rotten landlines, the use of climate machines is rising and there are no investment in sustainable energy... what does Tx have more than oil..? Sun... why not use it?

This is a chance to lower the prices... have look to Germany or Spain... the price for power is declining because the part of regeneratable energy is rising... I know, sounds unreasonable but is true... I lived there long enough to see it myself...

Answer 5

Normally supply and demand drive a market..Inflation does figure in....

However, our recent spate of increases has been greed - perpetrated by the big oil companies with the blessing of the wing-nut in the Oval Office - whose own family's wealth comes from oil

We have been screwed over royally....

Answer 6

I'm going with the supply and demand. The recent storms and cold snaps are taking up fuel costs just as the current storm up east will show up at the pumps. During our warm spell this winter the prices were falling.

Answer 7

Illegal price fixing and supply manipulation by our "friends" the Saudis is driving up the cost of energy.

Answer 8

In this case, supply has not kept up with demand, as, a result of tensions in the Middle East. Invading Iraq was a strategic mistake.

Answer 9

Supply and demand. We do not and have not added electrical generating plants or tapped new natural gas supplies to keep pace with growing demand.


Inflation is not at any kind of a high. It is at a rather low rate.

Answer 10

It it is greedy stock holders. We are paying 3x more for every type of gas product the reported profits for Exon for February 39.5 Billion. That comes to 107 million a day.
You are seeing the results of deregulation.
Consumers must United. Divided we loose.