all other factors being consistent (which they rarely are) prices go up. At some point, gasoline will become more expensive than alternatives, at which point those alternatives will become viable.What happens when the demand from China increases beyond those means to increase supply?
no we don't. see above.In other words, we have to produce enough to keep up with China's demand.
that's fine - as long as it's an annotated shorthand so we both know what you mean it works.(Yes, I used "China" as a general source for "increase in demand" - it was less cumbersome than using "China/India/3rd world countries")
wild swings that occur when relative supply and demand have not comparatively altered are obviously not produced by the interaction of supply and demand, but rather by other factors such as monetary policy, or perceptions concerning future supply v demand. what we have seen recently is increased perceptions that a significant percentage of future supply is threatened. If you dramatically increase future supply coming from a political stable region, not only do you decrease the price from increased supply, but you decrease supply by decreasing the impact of the perceived potential future threat.So what are you trying to say now? That volitility is NOT caused by the small difference between supply and demand?
nope. I'm saying that the price of oil is not determined solely by direct supply and demand, given that 100% of the global production and futures markets do not go straight to the pump.Or are you saying the oil companies are lying when they say the price at the pump is dependent on the price of oil?
not as much as anything else, but certainly it has an effect (if by one crazy Muslim you are meaning Ahmadenijad). he is able to have that effect because of the percentage of global future supply that we are currently pulling out of his area of influence. if we reduce the percentage of future global supply that comes from his area of influence, we similarly decrease his ability to increase the price of oil.Or are you saying what I said several pages back, that one crazy Muslim's hot air has as much of an affect on global prices as anything else?