Demand outstripping supply for oil.

[lord_carbo]

Prices will just rise so long as there isn't a price ceiling set by the government. Demand or supply doesn't hit some magical wall Demand meets supply at an equilibrium. Duh. That "supply peak" is just the sign of a shortage. Raise prices. Bam. Less people are going to buy oil. People will carpool, go on buses (which will also rise in demand, so consequentially, price and quantity will rise), and make investments in other mutual funds like that.

THEN people will be like "**** this ****" and go onto new sources of energy. Oil and other sources of energy are substitute goods. While general demand for energy is inelastic, oil can become even more responsive when there are more pragmatic approaches to energy such as solar power and wind power. People will convert faster than a Jonathan Edwards congregation. By theory, in response to the transition, oil prices will go down, and in response to that, people will still be able to afford oil just as either a superior or inferior good, etc. ad infinitum. It won't keep increasing. Once we have a dominant substitute good, gas prices won't be super high. Gas prices are attributed to demand, too.

Oil and energy companies realize that oil is going to eventually run out, and in order to stay on top of their broad industry, they and independent researchers are investing in new sources of energy. Why would they move on to something like hotels or real estate? If oil goes out we'll need a new medium of energy because energy demand is inelastic, and they're the ones with the most experience in energy. Countries who also get a lot of money from oil have been working on things to promote tourism, big spenders, and general prosperity, a good example being Dubai. Anyone who thinks that they haven't been or at least aren't going to is either assuming that the companies are stupid, or (more likely) doesn't know that much.

Economics, guys. This is why the boycotts people are trying to do to lower gas prices aren't working. Not buying gas on May 15th doesn't lower energy demand. Not buying gas from the two biggest suppliers doesn't lower energy demand.

Your worries should just be apprehension. The only concern is how efficient the alternative energy source that comes out on top will be. Gas prices won't rise beyond anything feasible, and there won't be any problems so long as government doesn't intervene (the oil crises of the 70's were arguably due to international disputes).

Additionally I don't think oil companies are rapacious corporations just out to **** with us, Tokzic. Are you just assuming that because they're raising prices really high? Oil companies hold both an oligopoly to commuters and an oligopsony to oil refineries and oil reserves. They're just trying to maximize profit. And it's working. Demand rises during the holiday season, which is why energy becomes more expensive then. Basic, basic economics. However, so much goes into energy production of all kinds, especially all of the energy you don't get at the pump. The public's perspective is a bit skewed on that, although it's Utopian to assume almost anyone will because, as I said, so much goes into it. That fact is about as much as one could ordinarily comprehend.