Episode 31: More Oil "Doomsday" Cries

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Eerily, my newspaper contains the headline, “Oil Armageddon Awaits”! This was after completing the episode about doomsday myths and oil-crisis chicken Littles. An economics professor, no less, predicts “Armageddon” from the consumption of oil. It’s hard to believe the author is an economist--there are so many contradictory and ignorant statements in the article. For example, he starts out by condemning the high gas prices, and finishes by bemoaning Americans’ “addiction” and unwillingness to conserve. He should have learned in school that high prices trigger conservation! Demanding low prices and conservation is absurd. He also explains that “oil supply is limited and demand is not.” This statement is economic nonsense: “demand” is only meaningful with respect to a given price, and given a price, demand is indeed limited. At $1,000,000 per barrel, the demand for oil is virtually nil. At $1 per barrel, the demand might exceed the world’s supply. Again Mr. Heise is apparently ignorant of the key role that price pays in limited demand.


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