Supply and Demand

During my time at Berkeley getting my MBA there were two professors that peaked my interest in economics and corporate America. I am going to write a series of articles covering various topics related to my interest and what I have observed from many years in the corporate world.

I tend to look at things in very simple ways, that way I can understand the relationship between various elements of the overall system. For me economics all comes down to the law of Supply and Demand. It is quite simple; if you have something that someone else wants you control the price. If there is a large supply then one has to sell at a lower price. Look at gas prices. The oil producing countries attempt to control the supply to match demand so that they can get the maximum dollar for all of their oil. Along come the speculators who basically add a bit of Las Vegas to the equation. They are all betting on whether the future prices will go up or down.

This does add an interesting element to the mix, but in the end it all still comes to Supply and Demand. It basically depends on one person making one bet and some else another. For every winner there is a looser. Each is making a statement about their perception of how much demand is there for their bet.

So watch what happened. Demand was growing rapidly for petroleum products and at the same time the oil producers were holding the supply constant. Sure enough the price began to rise. Then along came the speculators and their bets. The prices rocketed up.

With the higher prices the natural effect is that demand will do down. We did see a large reduction in the demand for gas. So now the prices begin to go down. All the betters are faced with a Supply and Demand problem. The demand for their high priced bet is not there and the whole house of cards collapses.

Of course there are plenty of players that attempt to manipulate either supply or demand. There are plenty of stories about tankers full of oil delayed until after key dates have passed. The government also seems to want to get into the game, more on that in a later article.

Sarah Palin

America really wants to like Sarah Palin and why not, here is a small town American girl that does all those things that people dream of. She is the American Dream. Her debate really played to this with the folksy jargon and the wink of the eye.

Unfortunately, being the Vice President of the United States isn’t being on Mayberry Street. I find it interesting that people look at debates like they are a hockey game with a winner and a looser. Every one on the ice knows what their role is and they have been coached to do it in a prescribed way. Freelancers are quietly weeded out or they become heroes.

So goes it here. My take from the debate was the Sarah utilized all of her news casting skills. She had memorized all of the buzz words and she knew exactly what was expected of her. Looking directly into the camera she delivered every play just as scripted.

I have made several trips to Alaska and it is a spectacular state. In this context though many of the people that I met said that the events of the rest of the US and world really don’t impact them. Based on my reading, Sarah held a similar view and didn’t pay much attention to events outside of Alaska. As the governor this probably made a lot of sense. As the VP of the US this terrifies me.