Sunshine and Light

Interesting oil commentary

Via Asymmetrical Information, I've come across this article on Petroleum Follies. I found the first few paragraphs an interesting tak, but felt like the last three which proposed a solution were trying to cram everyone into the same cookie cutter mold. Can't be done and quite honestly I don't think it's a good idea even if it could be done. But in the comments section, I found the comment by Mark Seecof at May 3, 2006 11:13 PM to be very interesting.

Yes, my geekdom raises it's ugly head again. I'm fascinated by the economics of high oil prices. By the way, from Asymmetrical Information, I thought this was an interesting set of questions about oil issues from one of her readers:

Will someone please explain to me how all of the following can possibly be true about the same market?
(a) all demand is still being met, i.e. no rationing is occurring (via the price system or otherwise, as far as anyone can tell, there's no evidence of inability to meet all the demand that would exist at the lower price);
(b) prices are increasing faster than the marginal cost of additional supply to the oil companies (profits are increasing); and
(c) no oil company is competing on price by reducing its profits back to the equilibrium level (i.e. by only increasing prices in an amount sufficient to meet its additional marginal cost).

posted by MyHusbandRules @ 9:46 AM