How to bring down oil prices

While in the Middle East last week, President Bush requested that Saudi Arabia increase its oil production and seemed miffed when Saudi officials responded that their 300 thousand barrel per day increase was enough to keep supply in balance with demand. Bush then followed with an empty threat that the current high price will serve to accelerate the move to alternate energy sources by his and other countries. I say empty threat because we are still so far away from a viable alternative to gasoline and diesel for powering motor vehicles.

Apparently, either the Harvard MBA program did not have a good introductory economics course or George was cutting class the day supply and demand was taught. The classic supply-demand curve has an optimum spot to maximize revenue. Set the price too high and demand drops drastically. Set the price too low and the increased volume cannot compensate. The Saudi officials have a responsibility to maximize returns for their oil.

So how about this, US of A? How about you increase your oil production before going hat in hand to beg others to do it.


Tags: , , , ,

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: