{"id":14723,"date":"2015-11-24T07:49:10","date_gmt":"2015-11-24T12:49:10","guid":{"rendered":"http:\/\/olduvai.ca\/?p=14723"},"modified":"2015-11-24T07:49:10","modified_gmt":"2015-11-24T12:49:10","slug":"why-supply-and-demand-doesnt-work-for-oil","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=14723","title":{"rendered":"Why \u201csupply and demand\u201d doesn\u2019t work for oil"},"content":{"rendered":"<h3 class=\"entry-title\"><a href=\"http:\/\/ourfiniteworld.com\/2015\/11\/23\/why-supply-and-demand-doesnt-work-for-oil\/\" rel=\"bookmark\">Why \u201csupply and demand\u201d doesn\u2019t work for\u00a0oil<\/a><\/h3>\n<div class=\"entry-meta\">The traditional understanding of supply and demand works in some limited cases\u2013will a manufacturer make red dresses or blue dresses? The manufacturer\u2019s choice doesn\u2019t make much difference to the economic system as a whole, except perhaps in the amount of red and blue dye sold, so it is easy to accommodate.<\/div>\n<div class=\"entry-content\">\n<p><img decoding=\"async\" class=\"size-full wp-image-40374\" src=\"https:\/\/gailtheactuary.files.wordpress.com\/2015\/11\/supply-and-demand-wikipedia.png?w=640\" alt=\"Figure 1. From Wikipedia: The price P of a product is determined by a balance between production at each price (supply S) and the desires of those with purchasing power at each price (demand D). The diagram shows a positive shift in demand from D1 to D2, resulting in an increase in price (P) and quantity sold (Q) of the product.\" \/><\/p>\n<p>A gradual switch in consumer preferences from beef to chicken is also fairly easy to accommodate within the system, as more chicken producers are added and the number of beef producers is reduced. The transition is generally helped by the fact that it takes fewer resources to produce a pound of chicken meat than a pound of beef, so that the spendable income of consumers tends to go farther. Thus, while supply and demand are not independent in this example, a rising percentage of chicken consumption tends to be helpful in increasing the \u201cquantity demanded,\u201d because chicken is more affordable than beef. The lack of independence between supply and demand is in the \u201chelpful\u201d direction. It would be different if chicken were a lot more expensive to produce than beef. Then the quantity demanded would tend to decrease as the shift was increasingly made, putting a fairly quick end to the transition to the higher-priced substitute.<\/p>\n<p>A gradual switch to higher-cost energy products, in a sense, works in the opposite direction to a switch from beef to chicken. Instead of taking fewer resources, it takes more resources, because we extracted the cheapest-to-extract energy products first.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Why \u201csupply and demand\u201d doesn\u2019t work for\u00a0oil The traditional understanding of supply and demand works in some limited cases\u2013will a manufacturer make red dresses or blue dresses? The manufacturer\u2019s choice doesn\u2019t make much difference to the economic system as a whole, except perhaps in the amount of red and blue dye sold, so it is [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[3],"tags":[10734,1233,588,1232,1427],"class_list":["post-14723","post","type-post","status-publish","format-standard","hentry","category-energy-2","tag-consumer-preferences","tag-gail-tverberg","tag-oil","tag-our-finite-world","tag-supply-and-demand"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14723","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14723"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14723\/revisions"}],"predecessor-version":[{"id":14724,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14723\/revisions\/14724"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14723"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14723"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14723"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}