In the case of oil, prices have recently been driven NOT by supply and
demand, but by the fears of supply and demand. Easily 50% of the cost of
oil
Collectively we demand it enough to pay the price they put on it. Are you
saying that if all discretionary use was suddenly discontinued the price
would stay the same?
Re-read my first message. I'm not saying that the prices would remain the
same. They would, indeed, go down if we were able to significantly reduce
usage. However, this would be based not on any real supply/demand pricing
forces, but by the fact that the improved margin between supply and demand
would reduce fears of the market of a supply shortage. This would result in
an immediate effort of profit taking by speculators holding oil contracts,
and the price would come down.
Greg
