famousringo said:
The problem is that the drop is due to a short-term drop in demand, brought on by the recession. The long-term demand curve is going nowhere but up (especially with emerging economies like China and India industrializing as fast as they can while the needed energy is available), while the long-term supply curve is staying flat or sliding down. The result is that the long-term price of energy is going nowhere but way up, and those unprepared for a future of scarce, expensive energy are going to suffer. Especially if you're an energy importer. |
The supply curve would slope upwards in the long term to indicate a diminishing supply of a scarce resource meaning fewer barrels of oil would be supplied at any given price compared to the situation today.
In any case the long term supply curve would have to account for improvements in technology, alternative supplies such as oil from coal, the Canandian tar fields etc. It factors in oil which is currently uneconomical to extract at the current prices but would be economical to extract at higher prices hence total quantity supplied increases in the long term with rising prices.
Tease.
