A pleasure I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude
Still, one can see that as positive news (especially when you look at numbers like the total number of kilometers driven, which has gone down in France for the past 2 years), and a trend likely to continue.
But one could also focus on the fact that a tripling of the price of oil (oil has now been over $60 for the most part of the last 2.5 years) has changed very little of our behavior - or only at the margins. Substantial change will require bigger "incentives" - ie bigger sticks in that case, ie higher prices. In the long run, we're all dead. John Maynard Keynes
So unless they price goes up up up (300-400$)and we can control inflation by moving goods with trains or we will nto see the destruction of demand necessary ...
But it is still good news becuase I expected that we can live with present consumption in the developed countries for more than a decade... 1/4 of emission come from private trasnprotation...drive less move around more with cars compeltely full, or train or bike adn we can keep with the economy going on with basicaly no disruption in otehr sectors... I fear more the bubbles and the lack of train transportation of goods tahn the increase in the price of oil directly...
Given that oil consumption has been essentially flat (but likely slightly increasing) even with the strong growing price trend, a simple-minded estimate of the price elasticity of demand not only will give a number very close to zero, but of the wrong sign (i.e., increasing prices would seem to lead to increasing demand!)
The fact is that "price elasticity of supply/demand" have to do with the supply and demand curves considered separately, which are not observable. What is observable is the clearing point, in terms of price and volume as a function of time, not supply and demand as a function of price at fixed time.
So, 1) why do people insist on talking about unobservable supply and demand curves? and 2) what is a proper method for estimating the price elasticity of oil consumption? [I have my own idea but I'd like to know whether there is a "standard" answer] We have met the enemy, and he is us — Pogo
