Spike in Gas Prices Summary, Logical Economic Principles...
Posted by HCN on Monday, March 7, 2022
Not intended to take up a whole lot of space, because once the it's mentioned, the rest is easy to fill in the blanks.
Quickly but carefully written full story here: https://hcn-cache.blogspot.com/2022/03/basic-concept-while-gas-prices-are.html
Presented in a bring to school and read aloud format.
The first economic lessons many learn in school, is supply and demand. That could hold the key why the cost of gasoline at the fuel pump is roughly 25 to 30% higher than it was just a few weeks ago.
Quickly but carefully written full story here: https://hcn-cache.blogspot.com/2022/03/basic-concept-while-gas-prices-are.html
Presented in a bring to school and read aloud format.
The first economic lessons many learn in school, is supply and demand. That could hold the key why the cost of gasoline at the fuel pump is roughly 25 to 30% higher than it was just a few weeks ago.
It is world news there is a situation with Ukraine and Russia.
... the average Joe at the gas station...
Oil, where gas comes from, is all over the world...
With oil in numerous places, including off-shore, this provides for a broader set of supply. Let us look at the huge amounts of oil strewn out all over the outskirts of Russia and abutting countries, such as Ukraine, plus off-shore drilling...
For easy illustration sake, Russia has arguably twice as much oil as the US.
If you keep going down the list, you will find countries like what comprises the region of Kazakhstan, Uzbekistan, Turkmenistan, (30k, 600, and 600, million estimated barrels, adding up to about 31.2 billion barrels) east of the Caspian Sea, which coming from the Atlantic shore, is east of the Black Sea, Azerbaijan, and of course Ukraine with amounts nearing 400 million barrels.
The tensions between Russia and Ukraine, going on in the Ukraine as we speak, is geographically set a straight north shot over the Black Sea from Turkey. Although individually they might not top the list, collectively, the amounts of oil add up.
A set of resources quite possibly affected, unless you go southeast of the Black Sea, where you arrive the Middle East.
So for right now, with crisis in Ukraine going on, that broad selection of oil, the supply, one might see, may have gotten trimmed down, ... Oil is for the time being, has its limitations, perhaps leaning to the Middle East, and the Americas, that's the US, Canada, and areas in and around Venezuela, as top producers, likely because honestly, it might be a matter of common sense that accessing those oil reserves in the Ukraine area, Russia and its reputed roughly 100 billion barrels of reserves...
As supply gets smaller, the demand gets higher, and often, when supply decreased and demand increased, so too are increases in the prices for the product, in this case oil, corresponding to the rising cost of gas to fill vehicles up.
The next level of complexity: '73 Crisis
The abovesaid can be explained to 4th and 5th graders. No disrespect intended. 6th and 7th graders are often taught a bit about history... For Joe, and a housewife under a tight budget, $20 just to lace the bottom of the tank can be a hard hit, when in other times, 20 bucks can get you around for a few days.
It all is remindful of the gas crisis of 1973, and 70s summarily. The 'OPEC embargo'. Well usually an embargo is associated with tensions in a region... Right now the tension in a region that has been getting a lot of media attention is the referent Ukraine Russia one...
