• The demand of oil and gas has remained about constant.
  • The supply of oil and gas has remained constant. Putin has only threatened to cut off Europe.
  • The cost of production for oil and gas has remained constant.

So, the three factors that should affect market prices have remained relatively constant, yet somehow the cost of oil and gas has doubled for the end consumer. Based on speculation?

Is it the oil and gas companies that are setting the prices? Even if they aren’t personally setting the prices, they are literally earning more money for doing no extra work. The cost of production is the exact same as it was before the war. The supply and demand are nearly the same. Yet, the oil and gas companies are making DOUBLE the money from average hardworking people.

Why are people getting mad at Putin for this? How do you interrupt this as anything other than a failure of capitalism or the work of greedy oil and gas companies?

Can someone with an economic background enlighten me?

  • knfrmity
    1·
    3 years ago

    It’s not so helpful to compare common economic wisdom with something immutable like the laws of physics. Social sciences don’t really work like that.

    Basic economics (simple supply/demand dynamics) don’t exist. We are told it does, but that ignores the most powerful dynamics and contradictions within capitalism. Just as the explanations of inflation having to do with fiat currency and central bank policies… These have some effect but the major driver is greed, or put another way the innate requirement of capital to grow via increasing profits.

    Capitalism isn’t based on basic supply and demand. Capitalism is based on the private ownership of the means of production. The additional fact that capital must grow at any cost, ad nauseum, means that we very quickly reach monopolies. Due to their immense economic power monopolies are not beholden to any sort of supply/demand pricing dynamic.

    Like I said, I think Richard Wolff explains this really well, from the angle of explaining inflation. Lenin’s Imperialism may be interesting as well to illustrate some of the overarching forces of capitalism.