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Originally Posted by thebrad
The supply would essentially be very little, but we could be left with a surplus (being optimistic).
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"supply" and "surplus" would be the same thing, unless drilling and delivery stopped.
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The price for gasoline would be astronomically higher to what we pay currently because the demand just isn't there any more, correct?
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No, it would be much lower. Things that are rare are more expensive than things that are abundant. It could only become scarce if 1) it could not be found or 2) companies were prohibited from drilling for it or delivering it. On the other hand, the price can also increase if artificial financial barriers (e.g. taxes or tariffs) are erected, resulting in a decrease in demand, even if the product is abundant.
If more people "demand" a product, they are willing to pay more. If few want it, there is less competition, and a relative abundance ("supply") of the product on the market increases and the price falls.
If China and India suddenly stop buying oil, you and I will be buying gas for less than $1. If the government taxed gas at $9 a gallon, the demand will go down and the companies that supply the product will charge less and less, but the price can't go below the tax + the cost of production and delivery, so it can't go below $9, even if there is no demand.
This is why there is a myth about "greedy big oil." There was no "greedy big oil" years ago when the oil companies were finding it nearly impossible to make a profit. Did they suddenly get greedy join together and find a way to control the industrial complex? LOL! It's simple economics, not a conspiracy..