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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: neolib who wrote (228997)	4/12/2005 9:33:33 PM
From: Tenchusatsu	Read Replies (3) \| Respond to of 1572600

Neolib, I generally agree with your comments, but don't you see a very non-linear response for price/demand right around the region that has become familiar? Once we are used to $3/gal it becomes no big deal again. But if it were $1/gal, then $2/gal seems terrible, until we become accustom again. Well of course the "familiar region" will generally be very price inelastic, i.e. minor changes in price have minor effect on demand. But factor out the fluctuations, and you'll be better able to analyze the effects of price increases. The economy as well as lifestyles will shift to accomodate the changes, but the net effect is that demand for gas will be lower. At a certain critical point, the nation will shift en masse toward hybrids, and we'll see OPEC's power to increase prices negated, at least until the whole nation is hybridized. Tenchusatsu

To: neolib who wrote (228997)	4/13/2005 12:36:40 AM
From: tejek	Respond to of 1572600

I generally agree with your comments, but don't you see a very non-linear response for price/demand right around the region that has become familiar? Once we are used to $3/gal it becomes no big deal again. But if it were $1/gal, then $2/gal seems terrible, until we become accustom again. Doesn't that assume that gas is pretty much in line with inflation and salaries are increasing at the rate of inflation as well. If gas continues to exceed the rate of inflation and salaries do not, then there seems to me there will be a point where demand for gas will become fairly elastic. And then is another issue which worries me. To date, producers have been reluctant to pass on the increasing cost of fuel. At some point, that may change and if it does, I suspect inflation will start to roar. ted