RE: [hreg] Re: gas prices
- For what it's worth, as a semi-objective outside observer to your
discussion, I think you and William Bell both bring out good points,
and I don't think that they are necessarily contradictory. How about
looking for common ground/understanding? I didn't read his comments
about your logic as an attack at all.
You are correct that higher prices discourage consumption. At the
same time, he is correct that higher prices encourage more production.
This is basic Economics 101, isn't it? (I have to ask, since I never
took the course)! Thus, I think you are right that higher prices are
good for the environment, while he is correct that they also encourage
more drilling and oil production.
In a free market with no price regulation or government intervention,
the supply and demand will be in balance, but with volatility due to
fluctuations in supply and demand over time. Given the reality that
oil and gas are declining assets, then over time (though perhaps still
quite a long time), the mean price around which prices fluctuate will
rise. Because of this, you will both be right. That is, allowing the
price to rise now will encourage more production, but the mean price
will not return to the original price since the supply/demand balance
will be met at increasing prices due to the limited supply longterm.
The rub is that the time for the supply to become limited enough to
substantially discourage consumption of so important and basic a commodity
as energy is likely to be a long time. After all, energy leads to so
much wealth creation that the increased cost is often considered
"worth it" and people accept the higher prices. However, over time,
this effect will be felt, and as William points out, higher prices
will encourage not only more drilling and oil production, but also
increased utilization of renewable energy sources.
> -----Original Message-----http://docs.yahoo.com/info/terms/
> From: Greg Carrier [mailto:gcarrier@...]
> Sent: Wednesday, May 30, 2001 6:29 PM
> To: email@example.com
> Subject: [hreg] Re: gas prices
> I am sorry that you chose to attack my logic as opposed to arguing a
> complex issue (supply/demand). My statement quoted refers to the
> fact that higher prices will deter usage. That happens far faster
> than companies can react with higher investments into creating new
> supply, which will then show the producers a lower consumption number
> than the "spike."
> Appliance and electronic producers pay little mind to making energy-
> efficient products because the average consumer doesn't care about
> that. Again, something that rising prices can aid. Personally, I
> prefer free enterprise solutions like that over increased
> governmental regulations.
> Let consumers vote with their own dollars.
> --- In hreg@y..., "William M. Bell, Jr." <wmb@i...> wrote:
> > ----- Original Message -----
> > From: Greg Carrier <gcarrier@a...>
> > To: <hreg@y...>
> > Sent: Sunday, May 20, 2001 9:22 AM
> > Subject: [hreg] Re: gas prices
> > > If you
> > > don't want additional drilling, let petroleum prices rise.
> > >
> > I think that something is wrong with your logic. Higher oil prices
> mean more
> > drilling and more production. The good news is that there are many
> > fields that were marginally profitable because of low oil prices,
> but higher
> > prices should result in more production from these fields. I don't
> know if
> > this is enough to make a difference in the demand for new sources,
> > Higher prices mean that PV, wind and oil producers are all in a
> > position to produce more product.
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