Andrew Simms: still not getting supply and demand

in which rising demand departs from flattening supply,

This is impossible.

After that, the gap between demand and supply inexorably widens.

So is this.

There is no such thing as \”demand\”.

There is no such thing as \”supply\”.

There is only demand at a price and supply at a price.

For example, there are all sorts of people who would like to buy oil at $7 a barrel. They\’re rather out of luck though. There\’s also all sorts of people entirely happy to sell oil at $700 a barrel. They are also rather out of luck.

What we actually live in is a market system where prices change so as to balance supply and demand.

Anyone at all who makes a statement so blindingly stupid as \”the gap between demand and supply\” or \”rising demand departs from flattening supply\” without pointing out that prices will adjust to make such impossible needs to be sent back to the London School of Economics to finish his degree.

Yes, this probably will get modded out but really Simms, really.

3 comments on “Andrew Simms: still not getting supply and demand

  1. I’m not sure why people bother talking about the price of oil in these scenarios. The problem (if true) is simpler – that there will not be enough oil to allow for global economic growth. The price is a bit of an irrelevance, though its the way competing claims will be resolved.

  2. As an evil oilman, I am often bemused by the commentary that I read on the subject.

    Much of it fails to notice that rising prices will lead to substitution. This is largely due to the fact that they think that substitution is only possible with electric cars / hydrogen. Yet taking the bus, staying at home are also possibilities.

    So we get straight line extrapolation, without thinking about what $200 per barrel would do to demand.

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