4 ms·

How is a refinery explosion, pipeline shutdown or glut proof that demand is elastic? All that shows is that supply is elastic and that market price varies. For

How is a refinery explosion, pipeline shutdown or glut proof that demand is elastic? All that shows is that supply is elastic and that market price varies. For the most part, demand is inelastic. You require the same amount of fuel to go to work/school and return. Now you could vary your shopping habits, go to a shopping center with several stores as opposed to the stores you like. You could put off a road trip or vacation but it isn't like either of those things are the bulk of gasoline usage. Refinery and pipeline problems are relatively short-term events. Something like an embargo which caused the oil crisis would definitely change behavior and demand. When you talk about allowing prices to determine who gets and doesn't get a good that is fine when it is a luxury item like graphics cards. But when you talk about the same thing for a necessity like food, water and electricity then getting priced out of the market means death.

WalterBright 5y ago
> For the most part, demand is inelastic. Sorry, but that is obviously untrue. If it was true, gas prices would just go up and stay up. > But when you talk about the same thing for a necessity like food, water and electricity then getting priced out of the market means death. Then you'll have to accept that the inevitable shortages also mean death. Anti-gouging laws not only produce shortages, they make for less supply overall being available. (This is because high prices motivate increased supply.) P.S. For just one example, when gas prices are low, people will drive to the store to pick up a loaf of bread. When they're high, people will combine errands and buy more items on fewer trips to the store.
- onecommentman 5y ago
  Maybe you want to take this discussion over to the US Bureau of Labor Statistics… https://www.bls.gov/opub/btn/volume-5/using-gasoline-data-to-explain-inelasticity.htm https://www.bls.gov/opub/btn/volume-5/using-gasoline-data-to...
  - WalterBright 5y ago
    People also tend to buy SUVs when gas is cheap and econoboxes when gas is expensive. People also "hypermile" when gas gets expensive. (I know I do.) How do you explain the fact that when a refinery blows up, the gas stations still have gas to sell, though at higher prices? And frankly, gas prices haven't changed that much. You see much different behaviors in Europe with the far more expensive gas.
- themaninthedark 5y ago
  >Sorry, but that is obviously untrue. If it was true, gas prices would just go up and stay up. Only if there was a monopoly or collusion, otherwise the competition would cause prices to fall to a point just above break even. Well, more complicated than that, prices would fall to a point where it is profitable enough for the companies involved to keep producing the goods and not switch to making something else. >Then you'll have to accept that the inevitable shortages also mean death. Anti-gouging laws not only produce shortages, they make for less supply overall being available. (This is because high prices motivate increased supply.) No, you can also over produce something and pay for the over production. We do that with food. That is why you hear a lot about paying farmers to not farm or dumping excess grain in the ocean as opposed to selling it. >P.S. For just one example, when gas prices are low, people will drive to the store to pick up a loaf of bread. When they're high, people will combine errands and buy more items on fewer trips to the store. I literally used that as one of my examples: "Now you could vary your shopping habits, go to a shopping center with several stores as opposed to the stores you like. You could put off a road trip or vacation but it isn't like either of those things are the bulk of gasoline usage." But again, that is not the bulk of gasoline use. Most people are not going to the store for a loaf of bread, going back the next day for hamburger meat and going a third day for salad. Or even making 2 or three trips in a day. Most people don't like to spend their time in cars driving places.

WalterBright 5y ago

> For the most part, demand is inelastic. Sorry, but that is obviously untrue. If it was true, gas prices would just go up and stay up. > But when you talk about the same thing for a necessity like food, water and electricity then getting priced out of the market means death. Then you'll have to accept that the inevitable shortages also mean death. Anti-gouging laws not only produce shortages, they make for less supply overall being available. (This is because high prices motivate increased supply.) P.S. For just one example, when gas prices are low, people will drive to the store to pick up a loaf of bread. When they're high, people will combine errands and buy more items on fewer trips to the store.

onecommentman 5y ago
Maybe you want to take this discussion over to the US Bureau of Labor Statistics… https://www.bls.gov/opub/btn/volume-5/using-gasoline-data-to-explain-inelasticity.htm https://www.bls.gov/opub/btn/volume-5/using-gasoline-data-to...
- WalterBright 5y ago
  People also tend to buy SUVs when gas is cheap and econoboxes when gas is expensive. People also "hypermile" when gas gets expensive. (I know I do.) How do you explain the fact that when a refinery blows up, the gas stations still have gas to sell, though at higher prices? And frankly, gas prices haven't changed that much. You see much different behaviors in Europe with the far more expensive gas.
themaninthedark 5y ago
>Sorry, but that is obviously untrue. If it was true, gas prices would just go up and stay up. Only if there was a monopoly or collusion, otherwise the competition would cause prices to fall to a point just above break even. Well, more complicated than that, prices would fall to a point where it is profitable enough for the companies involved to keep producing the goods and not switch to making something else. >Then you'll have to accept that the inevitable shortages also mean death. Anti-gouging laws not only produce shortages, they make for less supply overall being available. (This is because high prices motivate increased supply.) No, you can also over produce something and pay for the over production. We do that with food. That is why you hear a lot about paying farmers to not farm or dumping excess grain in the ocean as opposed to selling it. >P.S. For just one example, when gas prices are low, people will drive to the store to pick up a loaf of bread. When they're high, people will combine errands and buy more items on fewer trips to the store. I literally used that as one of my examples: "Now you could vary your shopping habits, go to a shopping center with several stores as opposed to the stores you like. You could put off a road trip or vacation but it isn't like either of those things are the bulk of gasoline usage." But again, that is not the bulk of gasoline use. Most people are not going to the store for a loaf of bread, going back the next day for hamburger meat and going a third day for salad. Or even making 2 or three trips in a day. Most people don't like to spend their time in cars driving places.