WHEN DO YOU STOP and stick them with the oil?
You stop when you can no longer afford it, or it becomes "economic" to do something else.
In my case it would be to get the rent reduced (unlikely - but exactly the same dynamics of "rent maximisation" apply), or go and live somewhere else with lower heating costs. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
The 'consumers decide the market' bullshit is intellectually offensive. In almost every case that matters, markets are inherently assymetrical. Consumers have a choice to pay, or not pay, but they have no ability to negotiate prices directly, or to push for infrastructure alternatives.
And this is exactly how 'the markets' like it. Real consumer leverage is their worst nightmare, and they'll do almost anything to make sure it doesn't happen.
You could argue that wouldn't make a difference here, because in the case of a demand strike, the producers could always afford to sit it out, because they have an effective monopoly on an essential resource.
Which is true - but since OPEC isn't a monolith, it's hard to imagine that some suppliers might not decide to cut profits in return for sales, and prices would drift downwards.
Almost no product markets are competitive auction markets ... on the one hand, most competitive markets monopolistically competitive fixprice markets, not standardized product competitive flexprice markets ... and on the other hand, the largest value added in the economy is sold into oligopolistic markets.
So if the default was "normal", it would be an oligopolistic fixprice market, and to treat a market as a competitive auction market, you would have to justify that it does, in fact, differ from the norm in those specific ways.
OTOH, with a competitive auction market, Marginal Costs add up to a Supply Curve that is, by virtue of the infinite elasticity of firm demand, independent of market demand ... so you can talk about demand shifts and supply shifts and pretend that they can be independent things, where in 95%+ of all markets in the world, any change in demand elasticity a shift in the traditional Marshallian supply schedule, and a supply shift to a different part of the demand schedule with a different elasticity implies a further shift in supply.
So the default case is what's easiest to talk about with the traditional toolkit, not what's normal. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
the default case is what's easiest to talk about with the traditional toolkit, not what's normal.
the default market in the marginalist economics tradition is the competitive auction market, so a competitive auction market can be assumed by default in a discussion without requiring a defense, but any other market requires defense.
However, this explains why economists attempt to convince politicians to turn everything into competitive auction markets. Energy liberalisation, emissions trading, anyone? When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
The quickest way to half the cost of oil is to use half as much. Lose the big car, insulate your house. Get a heat pump. Car pool.
Of course Joe Blogs can't negotiate with Saudi Aramco, but he can stop feeding demand into the system.
Reminds me of what Mexicans say about cocaine, heroine and marijuana-toking Americans. ... all progress depends on the unreasonable mensch.(apologies to G.B. Shaw)
