Quote:
Originally Posted by Tcoat
Different scenario. There were still millions and millions of cars on the road that would need gas eventually.
For a better example during current conditions look at the price of things such as 100 octane fuels. It is exuberantly expensive since so few need or buy it. It doesn't cost any more to produce, deliver or store so the only reason it cost so much is low volumes.
When there are very few hobby ICE vehicles around nobody will be reducing prices to try and sell more oil. The volume pricing will go away and you will spend hobby prices for every drop of fuel, motor oil, coolant and the other necessities to keep an ICE car running.
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Well looking at the current price of anything tells you very little, looking at the price change through changes to supply and demand over time tells you much more.
On top of that the supply/demand of 100 octane fuel is... detached from oil production supply and demand - it has minimal impact on actual oil supply. Demand could go up 100% and it wont impact actual oil production or the wallets of those at OPEC.
You need to work out, and this is why its tricky, if OPEC can price for a future state and survive with very small demand based on those consumers that cannot move away from oil without collapsing the entire business, or is it more profitable to price oil in a way that tries to keep the market larger and more competitive to prevent the market size from tanking very fast.
There will be a minimum amount of customers that need fuel and cannot change to say electric, but that minimal amount will largely be governmental and I'm not sure even if that minimal market will be good for OPEC because its probably going to be small enough for internal governments to support.
So yeah, I'm not so sure a very high fuel price and tiny market is something that is attractive at all to OPEC, and that they may in fact want to continue to saturate the market to delay the reduction of the overall market size.
Of course I could very likely be wrong, this is something that my brain does sizzle a bit thinking about.