Sunday, June 08, 2008

Getting your priorities right.

Well it seems that we are in a bit of a pickle over the price of oil. So much so we are holding crisis talks. Read here.

Now correct me if I am wrong but is the price of oil not driven by market factors. Supply and demand the basics of economics. In fact it's it current high demand that is causing prices to surge. So fuel is up all around. It seems to me that it goes up but 0.5p per day as every two days another penny is added on. Ignoring the obvious which is the biggest winner out of the whole thing in the UK is actually Gordo and his taxes the price is now the price and is likely to be here to stay. Why is it that when there is a problem our government has it's fingers grasping the pie?

In the meantime however we have diverted foodstuffs to be used as fuel. This diversion is leading to a surge in food prices, riots and starvation. People are dying. Yet by the law of economics this new source of fuel should increase the supply and thus lower the cost. I wonder why that is not happening? Maybe my grasp of economics is too simple. I must nearly be qualified to be a labour politician. Just need to practise the lying with a straight face. Just can't get it right.

In the meantime the concern is the cost of fuel whilst people die. Talk about priorities.

4 Comments:

At 4:03 pm, Blogger Lord James Bigglesworth said...

Driven up by OPEC, Bag.

 
At 9:20 pm, Blogger Bag said...

Yes. OPEC are on the supply side. Adjusting supply and prices for the increased demand. Just like the people putting up the price of basic foodstuffs.

Basic economics.

 
At 10:55 pm, Blogger Henry Crun said...

Ahh but you live under the misapprehension that people just ring up a Saudi sheikh and order a couple of barrels at the going rate.

The price is not necessarily governed by supply or by OPEC per se, but by what the purchasers are prepared to pay.

 
At 11:02 am, Blogger Bag said...

Basic economics. I'm not an expert.

Supply and demand. If supply is high and demand low we have a lower price. If supply is low and demand high we have a higher one. Thus price fluctuated as high prices lead to reduced demand as people can't afford it.

Adding in the bio fuels should increase demand and thus prices should come down. However increased demand all over the world more than compensated and thus prices actually went up. So we ended up with high prices.

My real point was that high oil prices give us a crisis meeting yet the reallocation of food to bio fuels leading to starvation gets brushed under the carpet.

And one final thing to consider. The price to the consumer in the UK also covers our massive payments to the treasury. If this was reduced to the level of other countries the UK would not be in crisis. Of course, Gordo can't do it because he needs the money.

 

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