Why is it that we hear so much that the cause of high oil prices is rising demand?

Question

in my econ classes that I took, they told me that prices were determined by both demand and supply. but for some reason there are people that keep telling us its demand demand demand..and they call you names if you ever want to discuss supply.

Answer 1

because it fits their beliefs and they don't really care about the truth...

Answer 2

Obviously there are several factors at work.

1. Speculation over Iran's nuke program and how the world will react.
2. Oil supply
3. China and India's economies booming creating a lot of demand for oil where their was little only a few years ago
4. Refined product capacity. Environmentalists have prevented new refineries from being built while gas consumption has increased

What is a fair price? Given the how money intensive it is to find, extract, refine and transport it is amazing gas costs less then milk. Look at % margin, the only reason oil companies make so much is not because of % profit margin, it is because of volume. Furniture, car, etc... makers all make a much higher profit margin on their goods.

Answer 3

What I don't get is how increases in the cost of a barrel of oil seem to instantly raise the price of gas. I mean, if a freeze kills an orange crop the grocers don't usually run out that night and raise their prices. The oil still has to be transported, refined, and transported some more before the consumer ever sees it. Price increases and decreases should take days or even weeks to be felt, yet I've seen stations change their prices the same day of an announcement like this. Can one of you smart economic types explain to me how this isn't shady?

Answer 4

Selective listening here?

I have heard demand and supply many many times.

How often has the Oil producers been asked to step up production?

That's called supply.

Answer 5

traders are not the main important reason. Too a lot of human beings element hands at traders because of the fact the main important clarification for costly gas fees. they could no longer be the direct reason yet they're a reason. a larger reason is call for. there has been increasing call for for gas. China, India, and springing up international locations have had greater call for for gas/oil. so as that has brought about call for to upward thrust and expenses to pass up. additionally, production/exports of oil has long gone down. So furnish has long gone down. as properly, there is not any longer that plenty oil accessible. that's finite and could run out in line with probability in 30, 40 years. So its furnish isn't that vast. as a result, furnish (low) has bring about severe gas fees-- there is not any longer plenty furnish. So the priority is furnish-call for. no longer traders (properly no longer specifically traders). traders are area of the difficulty yet they are no longer the main important difficulty.

Answer 6

It is a joke on the public. They feel that people just are not that bright so they invent reasons for jacking up the prices. Then, the not-so-bright crowd go about parroting what they had seen on TV or heard from their talk show messiahs.

Just as with the diamond cartel, oil profiteers tweak prices to maximize their profits as with ALL businesses.

Proof is in the housing market. People who KNEW they could not afford the overpriced homes in lets say California, bought them anyway through rip-off financing schemes. Rather than just saying "Honey. We really can't afford this".

Answer 7

Ha ha good point and good eye . You have officially seen through your first pile of BS. It is supply and demand. The republican supporting oil industry is manipulating supply to artificially raise prices. You are well on way to the truth my friend.

Answer 8

Why was oil over 100 bucks a barrel in 1979 under Jimmy Carter? It seems these leftist loones are trying to blame Bush for this as well...Bahahahahaha. You guys crack me up...thanks for the laugh.

Answer 9

Greedy oil companies are the reason plain and simple.