Quote:
Originally Posted by 4x4van
It's sad that we are actually cheering about a few dimes reduction, when we are STILL paying nearly double what we were on Jan 3 2021.
|
The price of oil at the pump is based on the
worldwide market for crude oil that causes oil producers to celebrate when the price goes up - and we consumers celebrate when the price goes down.
There are plenty of places in the world paying double what we're paying every day not just in the past year. So, yeah, the cheering is legitimate and, to me, not sad at all.
During the Pandemic oil and gas markets dropped to record lows because everything - worldwide - came to a halt and demand for fuel more or less halted. Oil wells were turned off, refineries shut down and reserves were reduced to match the lack of demand.
One year later, and the world is open again and demand is not only returning to pre-pandemic levels it is surpassing those previous levels. The wells and refineries don't restart at the flip of a switch and fuel reserves don't rebound worldwide over night.
It's supply and demand - we had consistent ample supply - then zero demand so supply was massively curtailed - now we have massive demand again but limited supply. It's econ 101.
One thing the high prices do is effectively lower demand. When the price gets so high that people start reducing trips and unnecessary travel the demand drops. All the while those high prices have jolted production into overdrive to take advantage of new found profits. The reduced consumption along with increased production forces the market to rebalance and prices to eventually drop.
Come on by we can pop a bottle of champagne ( a cheap bottle of course) 
Linear Mode
