When we buy more T.V. sets, the price comes down. Why does that not happen when we buy more oil?

Question

Major Tom:---I assumed most people would see the question as "thought provoking", since most people have simply accepted the claims about the very limited supply of oil.

Actually we have a great quantity of oil that the U.S. is unwilling to go after because of the possible harm to our environment. However, these people are O.K. with the drilling and pumping that takes place in other places everyday.

If you could convince consumers that T.V. tubes were in short supply for some mystical reason, prices would rise quickly.

Should we believe everything we're told?

Answer 1

Bull. The limited amount of oil is not the reason. The prices are artificially inflated by speculators who gouge the market and consumers. There's enough to go around for a long time but the price is set to maximize profit for the already deliriously rich holders. Regulation to cut out speculators is the answer to the painful spikes in price that everyone is currently experiencing.

Answer 2

because there is only so  much oil in the world to go around so the price ncrease s to encourage us to buuy more. If it was to be too cheap some places would buy so much that none would be left for another.

Televisions are man made and can always be replaced unike fossi fuel (oil)

Answer 3

Alternative TV sets are developed with lower quality / cost.  Oil does not have a viable competitor.  

If a manufacturer makes a super awesome TV and you are willing to pay top dollar for it, you will.  We are willing to pay for oil at its current value.  To blame oil speculators seems rather pointless.  If they sell oil at $140 a barrel and you buy at $140 a barrel, what does speculation matter?

If I can't afford the super awesome TV then I will not purchase it.  If I can't afford to fuel my car then I will find alternative methods of transportation and / or fuels.

Answer 4

Oil has became an essential tool in our everyday activities. It has no close efficient substitutes in terms of energy provision. Thus if we buy more oil, the producers can easily hike the prices up because they know we can't get that energy from any other source and that we will still buy the oil regardless of the price.

As with T.V sets, we can live without them. We can easil substitute them with radios or even live theater. That is, if they increase the price we can easilu forgo them but not with oil.

The best remedy to this oil price rise is to find other alternative sources of energy which are efficient as oil or more than oil and at the same environmental friendly

Answer 5

Fact:  There is an abundant supply of oil but the amount of oil available for sale is being controlled (OPEC can increase or decrease the amount being pumped).

Fact:  The worldwide demand for oil is increasing, thus creating more demand than current available supply

Fact:  There are not enough refineries in the US to meet the current demand for gas

Fact:  The refineries we do have are operating at about 85% of their capacity

Fact:  Increased prices in the US are due to a combination of the above facts.

One difference between TV sets and Oil is that a TV is a "durable good."  A TV does not have to be replaced after it is used.  

If you use Cheerios as an example (or any material that must be replaced after it is used) then you get a more realistic view of what is happening with oil.  With increased production and distribution costs, the cost of Cheerios has been increasing despite the fact that a lot of people still purchase Cheerios.  With the increased cost, though, and with more families having to spend more of their monthly budgets on fuel and mortgage payments, we can assume that the demand for Cheerios will go down (more people will purchase lower-priced cereal or no cereal).  The supply of Cheerios will go up, so either Cheerios has to cut production until the supply goes down, or they have to lower the price so the supply will be more affordable to more people.  

It's the same with oil.  We have to cut consumption (demand) so supply will increase, or we have to pay the higher price.  At some point the price becomes too high to afford and the demand will HAVE to come down.  Alternatives to oil and gas would cut the consumption of both, thus increasing the supply and dropping the price.    The current debates going on are about HOW to accomplish increasing the supply and/or decreasing the demand.  

THE IMPORTANT THING TO REMEMBER IS THAT CONTROLLING U.S. DEMAND /CONSUMPTION WILL NOT CHANGE WORLDWIDE DEMAND /CONSUMPTION OF OIL!!

Answer 6

Econ 101 teaches the straight foreword concept of the 'law' of supply and demand.  If demand exceeds supply then price increases.  If supply exceeds demand then price goes down.  

How simple and how clean, if only oil worked like that, and it does in a way, there is just more to the story.

The known reserves of oil far exceed present demand and future demand for a long time.  The suspected reserves beyond known reserves certainly have us considering that there is at least 200 years of reserves.  If we add to this the known reserves of shale oil (just U.S. and Canada) those reserves go far beyond that limit.

Then there is the beginning of change as to how oil comes into creation.  The common idea is that it comes from the same sources as coal, old organic matter through many thousands of years of change.  However, it now appears that oil, unlike coal, is a different and constant process that replenish itself.  Whatever the case may be there is more oil than we need for many generations.

If we look at oil as energy, and then add to the equation, other sources of energy, such as coal, solar, wind (I know another form of solar), organic sources such as sugar cane, corn, sugar beets, etc., and high tech with such as nuclear, we are swimming in energy.  That is, supply far exceeds demand.

Why then does the price of crude increase?

Because we must add transportation of energy from its source to its usable form.  Gasoline doesn’t come direct from the ground but from the processing of crude.  Before crude can be processed it must be transported from the source to the cracking plants and then to the refinery which co0nverts it into a number of usable products.

Think of it as a pipe.  A very narrow pipe.  A pipe which narrows at the point of the refinery.  A pipe which cannot be used unless it is primed with those who wish to ‘risk’ their investment funds, in other words those we define as speculators.

Consider, a narrow pipe which constricts a huge supply of a specific commodity into a commodity that is volumes less than demand.  In other words, the natural law of supply and demand is transformed by human cultural interrelationships into a very controlled commodity.  Due to that prices rise.

There is also another way to view this access to energy.  Humans have always had the need for energy and it has been difficult to acquire.  From the time of the first rudimentary fire where a single person kept the flame, access to energy has continually increased and became available to an ever widening number of people.  Wood fire, charcoal, coal, oil, natural gas, electric, nuclear, each advance has made it easier for the average person to acquire energy and at a decreasing unit cost.  It would appear that we (the world) is at a point for a new advance in energy distribution and that will surely change the equation again bringing an increase in access to energy at an even lower per unit cost.

Answer 7

Big J you amaze me.

Your either purposely trying to be thought provoking....

or

You're simply not smarter than a 5th grader.

(I'm hoping for thought provoking)

This just in: Excellent Point !

Should I fall on my sword or will you accept my head hung in shame for the rest of the afternoon ??

Falling now....Robin Meade will have details tomorrow morning.

Answer 8

Because there is a limited amount of oil in the world. There can always be more TVs made, but there is only a certain amount of oil. And as more and more people need oil, the demand goes up. And as the demand for oil goes up, so does the price

Answer 9

TV sets can be produced over and over and over again.

Unfortunately oil is a finite resource, but the US does have more.

Which brings up the question, "Why isn't US drilling"?

Ask the Dems.