News for everyday life

It's hard to feel like this is breaking news anymore. The news that the price of oil hit a new all-time high is almost a daily occurrence anymore. This AP article is filled with all sorts of the economic principles we have discussed throughout the semester; supply and demand, constraints, etc. Relevant to our more recent study is the externalities of the situation. We are all intimately familiar with the effect this has on our personal, everyday lives. Just driving our personal cars is cramping our style and effecting our decisions. I'm not sure where the locus of control falls with this, but we should be aware of the effect these conditions have on all other aspects of life too. As stated in the article, with the rising costs of fuel, especially diesel fuel, the cost of anything transported by truck, rail, or ship is going to have to rise as well. Obviously, this affects everything. How's that for an externality?


Dr. Tufte said...

I continue to be stunned by the rising price of oil. I don't have an explanation for it right now (I have quite a few, but none are quite right). It will be interesting to see, 10 years down the road, what solid explanations end up being supported by research.

One thing I do know is that both supply and demand for oil are inelastic, so we can expect a lot price volatility.

I also know that refineries do not change grades of oil unless they have slack, and that they prefer cleaner types which require less refitting. Most of what is reported in the news is the price of the very best quality crude oil they can find. There are lots of cheaper kinds out there, and they're still cheap.

Dr. Tufte said...

This is a test.

Anonymous said...

Oil is the life blood of the US economy, and is the case for any necessary medical procedure or drug that will keep a person alive, they will pay for it. The American consumer will keep paying for the high price for gasoline and the markets will respond in kind. The whole debate about alternative is comic book fiction. The post World War II is now over and history.

Danny L. McDaniel
Lafayette, Indiana

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Anonymous said...

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Liam said...

I do miss the fact that I was paying roughly $4.30/gallon for gasoline just a few months ago. I had hope for the changes, more specifically the innovation, that seemed to come out of thin air. The technology was roughly the same, but the mind set many people were arriving to was enough have real potential for change in infrastructure over the next few years.

As long as i pay less than two dollars for a gallon of unleaded gasoline, i will not expect to see anything except the whole economy simply waiting for the next oil shock.

Dr. Tufte said...

This is interesting, but I don't seen any awareness that the change you wanted was necessary. Maybe it is, but you seem to be assuming that.

Victoria said...

As Dr. Tufte said, both supply and demand for oil are inelastic, so I think Eco-car would help that oil pricing problem little bit.

Dr. Tufte said...

But if the oil price problem goes away, then so should the eco-car. Will it?