The price of oil IS ELASTIC!!!

[rockfl9]

If it were not elastic oil would still be $120/BBL. Supply is up , demand not increasing thus the price went DOWN.

OPEC should have reduced supply , But the member countries need the money and would cheat anyway.

 

 

 

Textbook economics says , devalue the dinar to balance the budget. Like russia and china et al.

But Iraqs political situation is fragile, Too many people directly dependent on government jobs. Inflation increase and a defacto wage cut . Abadi's enemies would surely blame him.

 

The alternative is to borrow more money . But Iraq doesnt have an established credit RECORD. Another round of borrowing would be difficult and expensive. The market for high-risk bonds is shrinking. Doing projects on vendor credit is tricky. 

 

 

[SocalDinar]

Cutting their own throats by increasing production Rock. There is no where left to store crude. I've heard that every rust bucket ship that

Will hold oil has been leased and is anchored with a full load. What happens now? Oil will continue to drop.

[TrinityeXchange]

i have to disagree with the title of your post Rock.  oil is very much an inelastic commodity.  the demand for it is not commensurate to the price it is set at.  at $100+/bbl there is demand for it same at $40+/bbl.  unlike a sony television where a steep increase in price will certainly drive away demand.  one of the most brilliant monetary moves in the history of mankind was the united states orchestrating "oil for dollars" whereby opec's oil was agreed denominated in usd.  irregardless of the price, the commodity would enjoy unforeseeable demand.  

 

there might be some argument to whether or not the commodity is "perfectly inelastic", you might be able to support that case.  but it has been proven at the very least an inelastic commodity.  

 

inelastic definition:

Economics textbooks define “inelastic” as meaning that a 1% change in the price of a good or service has less than a 1% change on the quantity demanded or supplied. For example, if the price of an essential medication changed from $200 to $202 (a 1% increase) and demand changed from 1,000 units to 995 units (a less than 1% decrease), the medication would be considered an inelastic good. If the price increase had no impact whatsoever on the quantity demanded, the medication would be considered perfectly inelastic. Economics textbooks depict the demand curve for a perfectly inelastic good as a vertical line, because the quantity demanded is the same at any price.

[rockfl9]

TX : IF the PRICE was not elastic, how do you explain the drop from 110 to 50 in 12 months???

A price ( particularly of a commodity) IS elastic if it is influenced by changes in supply or demand! Clearly a case of OVERSUPPLY.

You are correct when you say the DEMAND is inelastic. Oil in its many forms is purchased to be CONSUMED, not stockpiled. Once out of the ground it deteriorates.

 

SD: I dont know how far along they are but Saudi Arabia has a project to build the world's largest oil containment , the size of a small lake.  

 

i have to disagree with the title of your post Rock.  oil is very much an inelastic commodity.  the demand for it is not commensurate to the price it is set at.  at $100+/bbl there is demand for it same at $40+/bbl.  unlike a sony television where a steep increase in price will certainly drive away demand.  one of the most brilliant monetary moves in the history of mankind was the united states orchestrating "oil for dollars" whereby opec's oil was agreed denominated in usd.  irregardless of the price, the commodity would enjoy unforeseeable demand.  

 

there might be some argument to whether or not the commodity is "perfectly inelastic", you might be able to support that case.  but it has been proven at the very least an inelastic commodity.  

 

inelastic definition:

Economics textbooks define “inelastic” as meaning that a 1% change in the price of a good or service has less than a 1% change on the quantity demanded or supplied. For example, if the price of an essential medication changed from $200 to $202 (a 1% increase) and demand changed from 1,000 units to 995 units (a less than 1% decrease), the medication would be considered an inelastic good. If the price increase had no impact whatsoever on the quantity demanded, the medication would be considered perfectly inelastic. Economics textbooks depict the demand curve for a perfectly inelastic good as a vertical line, because the quantity demanded is the same at any price.

[TrinityeXchange]

TX : IF the PRICE was not elastic

 

You are correct when you say the DEMAND is inelastic. 

that is the only thing i am stating my friend....the DEMAND for oil is inelastic.  a 1% change in its price has less than a 1% change on the demand.  this IS the economic definition of elasticity.  perhaps you are referring a different definition, if so i stand corrected.  i thought you were talking strictly economics.