Thursday, August 21, 2008

Oil price follies - I


Earlier this blogger had noted that there doesn't seem to be an accepted "correct" answer re why oil prices climbed so high, the three dominant theories being a) supply/demand and external factors, b) speculation, c) the fall of the dollar (or perhaps, a fourth theory, a combination of the previous three).

In How to Burn the Speculators the onus is placed squarely on the speculators. Perhaps, perhaps not. This blogger, however, was wondering about a statement included i.e. "And as economist Tom Palley has pointed out, consumers can help too. An awful lot of gas is stored in cars. If people stop topping off and make do with half a tank, they'll back up supply and lower demand. It's a brilliant suggestion and definitely worth a try." Hmm, brilliant? Over the past year this blogger has averaged 550 miles a month. Assuming that this stays constant, as does his mpg, this blogger is not sure how he is reducing his demand one iota by only filling up half a tank each time. It seems like this would only require twice as many trips to the gas station, wasting a little more gas (unless the gas station is always along the daily route). Multiply by all the other motorists out there... What was so brilliant about that suggestion?

Previous blog entries:
Who (or what) is responsible for high oil prices?
Dunces

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