Oil Price Isn't Elastic you say...look at this

[Raymond Leury]

I’ve had exchanges before on the price elasticity of oil.  If you want proof that oil prices are elastic, the IEA itself (yes, that agency that Dump has threatened with defunding if it wasn’t more favorable to fossil fuels) has been making related statements.  See Oil prices may be starting to come down for a worrisome reason. (bolding mine)

 

“Oil prices have started to slip — but not necessarily for reasons that suggest a return to market normalcy.

The International Energy Agency said Tuesday that “demand destruction” has begun to unfold. As a result of the acute energy commodity shortages stemming from the closure of the Strait of Hormuz, oil appears to have reached a point where it is now so expensive that overseas businesses and households have begun curbing investment and consumption.

 

The good news about the Iran war is that it is accelerating electrification by making fossil fuels more expensive.  This current situation is very different from that during the ‘70s oil crisis where we had very few alternatives to fossil fuels.  We now have plenty of alternatives that are better and less expensive, so any move away from fossil fuels will be permanent.

 

Thanks,

 

Raymond J Leury