With the large impact on airlines, shouldn't oil demand be dropping and prices following?

Question

Clearly this is having a severe impact on certain industries.

Answer 1

It is the classical model of Supply and Demand. Currently, the Supply side is running the show. It decides how much we get, not what we want (Demand). When people drive less, or travel less, it only effects the QUANTITY supplied, but not the actual supply. Substitutes are currently being employed (cars with awesome gas mpg's, ethanol fuel, battery powered cars. etc. The model doesn't account for specific situations, it only accounts for the what is happening in the large scope of things. Prices are actually doing its job. It discriminates for the have/have-nots. Otherwise we'd all own Beach Houses. My only thought is to hope it goes higher. It will drive the substitutes to speed up and potentially get America weened off oil. It is counter to the Utilitarianism of making every one happy, but we need to change.