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Saturday, May 28, 2022

Interesting Death Spiral -- May 28, 2022

Saudi Arabia spokespeople, and most agree, I suppose, suggest "supply and demand is currently balanced."

"High" and "higher" prices will help put a damper on demand, helping to maintain that "supply and demand" balance.

However, more and more jurisdictions, worldwide, are offering "subsidies" of some sort to offset the "high" and "higher" prices of gasoline. In the US, the most common "subsidy" being considered is a "tax" holiday on gasoline. 

"Subsidies," all things being equal should encourage demand.

So, with "subsidies," all things being equal, put the supply / demand balance in favor of increased demand.

What happens when demand exceeds supply by one bbl?

Subsidies are "feel-good" reactions to high prices but it only makes things worse, least of which is less income for governments to maintain highways and/or meet other budget considerations. 

At least that's one argument.

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Texas

Mustang Island? I don't think so. The individual taking the photo is in the Houston area. From twitter.


Also, Texas. How do we know? Buc-ee's. 

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