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Originally Posted by Butterfly  Quote: |
Originally Posted by bkkandrew Taking the average increase in production to 2004, the 2007 figure respresents a 4.3% shortfall, not 2%. Maths not your strong point I guess. | 
ok let's assume it's 4%, not 2%, it's still not enough to justify a 200% increase |
so you admit being 100% out on your maths then. Good, thats a start. Hopefully soon you will admit being 100% wrong on most other things.
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Originally Posted by Butterfly First, demand for oil is price elastic in the long term, not in the short term, as it takes time to adjust oil consumption habits. |
It is not possible to state this, as for a large part, new technology is required for the conversion to take place. This technology has yet to be invented, implimented or funded.
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Originally Posted by Butterfly Ok let's skip that argument for a second |
Thought you would.
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Originally Posted by Butterfly If price are elastic, it means that any increase in price, no matter small, will result in the decrease in quantity demanded. Since the Demand curve is sloping downward (remember econ 101), that small increase in price will result in a large decrease in the quantity demanded (definition of Demand price elasticity). As we could see, price wasn't elastic in the short term as consumption was still strong despite the rising oil price. Not now however, consumers have started to adjust their habits, companies reduce their output, demand for oil decrease. |
Arse about ladyboy tit here Butterfly.
On this thread, people have been referring to the fact that the price is elastic relating to oil in the short term, as oil and its byproducts are essential to life. Any disposable income by both individuals or companies will be used to fund any price increase, up to the point when disposable income is reduced to zero. This is the same as the price elasticity of food. Once the price goes beyond the level that can be afforded by total disposable income individuals riot (as has been happening) and companies collapse in part or whole, see airlines going bankrupt, or reducing their operations.
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Originally Posted by Butterfly Now this contradicts completely your argument that the massive elasticity was the reason behind the increase in price. This is not logically possible and show your complete ignorance on the subject and how you do not understand basic economic principles. I suggest you google price elastic of demand and see by yourself if you don't believe me. Of course if you were mentioning price elasticity of supply, then your argument would be even more wrong. A massive price elasticity of supply would mean that only demand determines output and price, and since it would be very elastic (it's supply remember, not demand) it would have no effect on price, or only a very marginal effect on price. A very small increase in price, would bring a massive increase in output (definition of price elasticity of supply). |
The glaring omission from your ramble is that since 2004 it has been clear that no further output is possible. This is the whole point of the matter. According to the most basic supply and demand arguments, supply increases when demand increases to take advantage of the resultant increasing price. All very well for making widgets, but if there is an actual constraint on production (e.g. the stuff isn't there to be pumped), then the only this that bring back supply/demand equilibrium is ever higher price until the demand has been suppressed. The actual question is; what price does oil have to be to suppress demand to 2004 levels?