- The demand of oil and gas has remained about constant.
- The supply of oil and gas has remained constant. Putin has only threatened to cut off Europe.
- The cost of production for oil and gas has remained constant.
So, the three factors that should affect market prices have remained relatively constant, yet somehow the cost of oil and gas has doubled for the end consumer. Based on speculation?
Is it the oil and gas companies that are setting the prices? Even if they aren’t personally setting the prices, they are literally earning more money for doing no extra work. The cost of production is the exact same as it was before the war. The supply and demand are nearly the same. Yet, the oil and gas companies are making DOUBLE the money from average hardworking people.
Why are people getting mad at Putin for this? How do you interrupt this as anything other than a failure of capitalism or the work of greedy oil and gas companies?
Can someone with an economic background enlighten me?
While I don’t have an economics background I may be able to point you in the right direction.
This time the price increases are very obviously just greed, if one cares to look as you have. But when you look at all other price increases, the ones that all come together to form this supposed meta-phenomenon called inflation, it’s all just greed. I think Richard Wolff explains it really well and a bit more in depth, there are some videos around of that.
In general people blame Putin (although conservative echo chambers blame Biden) because that’s what the media tells them to do. We are educated and told that the news and our politicians are generally trustworthy, so when they blame someone most people just go along with it. They don’t care enough to really learn about the issues, for so many various reasons, and the various sources one can easily find and have been trained to trust parrot this very same line of inflation as a more or less uncontrollable meta-phenomenon to serve as cover for the otherwise transparent greed of capitalists.
I didn’t mention inflation because that’s another more complicated topic. From what I understand it’s more based on fiat currency rather than basic supply & demand principles.
The reason I asked this question is that according to basic supply & demand principles, which capitalism is based on, these oil & gas price increases are bullshit. Am I missing something? Are people that blind?
I’m open to being wrong and fully admit that I’m not an expert on these topics. But it seems to me that capitalism is failing on a fundamental level. Supply/Demand/Cost of Production stays the same but the consumer price DOUBLES. This spits in the face of BASIC economics. It’s like someone invented a perpetual motion machine that spits in the face of thermodynamics.
It’s not so helpful to compare common economic wisdom with something immutable like the laws of physics. Social sciences don’t really work like that.
Basic economics (simple supply/demand dynamics) don’t exist. We are told it does, but that ignores the most powerful dynamics and contradictions within capitalism. Just as the explanations of inflation having to do with fiat currency and central bank policies… These have some effect but the major driver is greed, or put another way the innate requirement of capital to grow via increasing profits.
Capitalism isn’t based on basic supply and demand. Capitalism is based on the private ownership of the means of production. The additional fact that capital must grow at any cost, ad nauseum, means that we very quickly reach monopolies. Due to their immense economic power monopolies are not beholden to any sort of supply/demand pricing dynamic.
Like I said, I think Richard Wolff explains this really well, from the angle of explaining inflation. Lenin’s Imperialism may be interesting as well to illustrate some of the overarching forces of capitalism.