I understand supply and demand in economics and in the purchase price of items but can someone explain:..?

Question

If the United States is purchasing and using less and less oil each day due to the high cost per gallon, using smaller cars, walking, biking, use of mopeds, and public transportation doesn't that mean that our demand for gas has gone down thereby prices should also go down so as to increase our demand?

I understand supply and demand applies to the entire world in regards to oil and gas, however: shouldn't countries such as india and japan and china and Asia be paying more and more since it is their demand which has been rising?

Why isn't the price rising where demand is rising and the price lowering where demand is lowering?

For those who answer that other countries pay more than America for their gas, keep this in mind: they typically have smaller distances to drive, they drive far fewer SUVs, their public transportation is superior to ours, and the higher price of gas affects their way of living far less than it does ours in America.

Answer 1

Yes I understand your point.. but oil is not a resource that can be replaced so there is only so much of it. This makes the price go up for those who need it so much that they are willing to pay almost anything to get it. What the bigger question to me is..is, why were millions of dollars of U.S. tax payer money given to big oil industry to find other/different energy resources instead of to scientists who don't have their fingers in the pots of black gold?

Answer 2

You have thought just 2 parametrs; price & demand. You are forgetting that supply is going down / there are concerns on how long oil feilds in middle east can sustain global demand. hence even if you reduce demand, price can still go up due to decreasing supply!

btw, India and china should not pay more now because they did not pay any less in 70's, 80's and 90's despite having less demand. This is a fair world I hope :).

Answer 3

they should but theres too much greed so it doesnt happen....gas sales are high in July...lots of vacationing...

Answer 4

make a video and post it on youtube.... uve made a good point in your question...u should get everyone else to wonder the same thing....

Answer 5

the problem is that demand in the U.S. isn't going down enough to meet the fall in supply-the supply problems have a couple sources, one being that it is becoming much harder to reach oil (deep sea rigs are much more expensive than drilling down 100 feet for oil) and the other being that demand is skyrocketing in China and India.  To be quite honest, I doubt that demand in the U.S. is going down by a significant percent, if at all.  For every sob story you hear on the news about rising gas prices, someone is buying an SUV, planning a road trip, or making another trip to the supermarket because they forgot to get crackers during their last trip.

Your rationale for why this doesn't have an effect on other countries is flawed.  True, Americans generally have longer distances to drive, more SUVs, and inferior public transportation than Europe.  However, that is America's problem.  The rest of the world should not get higher gas prices because of our poor urban planning and car choices.