Monday, March 07, 2022

Supply and Demand

I don't think it can be overstated just how troubling it is that in the middle of a massive international crisis, which is in part a fossil fuel cost crisis, the administration kept going with its "EVERYONE GO BACK TO WORK" nonsense.

It was nonsense before the Russian invasion of Ukraine, but much like "people deciding on their own to wear masks during Covid," people working from home is a freebie. Without any effort whatsoever the pressure on fuel demand is reduced.

[Econ 101 Lecture Hat] when supply is very inelastic, tiny increases in demand can hugely increase prices. Tiny reductions can hugely decrease them!

Price of fuel is both a real concern and a political one, but wherever your chair is in White House meetings, I suspect keeping gas prices from doubling is a more pressing concern than futilely trying to re-establish some imagined idea of 2015 normality or propping up commercial real estate prices (whatever the hell the "go back to work" nonsense is about).