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The nature of demand in those markets means that demand there continues to be inelastic. With expanding economies that are increasing the wealth of the populace en mass, those countries are essentially creating millions of middle class consumers with middle class needs where they didn't exist before. There is no elasticity to the creation of new consumers, as few would reject the opportunity to join the middle class simply because gas prices are on the rise. Twenty years ago, global demand reflected almost entirely demand in the West, which was inelastic. Now that demand in the West is becoming elastic, some clearly feel that this should be the case for global demand as well. But demand in emerging markets is still inelastic, which means that the case of supply and demand driving the current rise in oil prices can be made. To the extent of at 65% rise in nine months? Perhaps not, but even if there is a market failure on account of speculators, it will correct itself eventually and we will still have inflated fuel prices and rising demand to contend with, bringing with it a whole host of supply and demand shifts across our economy.
Sources:
Boyon, Nick. (2008). As Gas Prices Near $4.00 a Gallon Nationally,...
Ipsos. Retrieved June 18, 2008 at http://www.ipsos-na.com/news/pressrelease.cfm?id=3953
Carey, Nick. (2008). FedEx Posts Loss; Gives Low Forecast; Blames Fuel. Reuters. Retrieved June 18, 2008 at http://www.reuters.com/article/ousiv/idUSWNAS861120080618
Kaiser, Emily. (2008). Fuel Spike Curbs Vacations, Dining Out. Reuters. Retrieved June 18, 2008 at http://www.reuters.com/article/ousiv/idUSN1744550120080618
Douglass, Elizabeth & Gaouette, Nicole & Simon, Richard. (2008). Are Commodities Traders Bidding Up Food, Fuel Prices? LA Times. Retrieved June 18, 2008 at http://www.latimes.com/business/la-fi-traders21-2008may21,0,2916861.story
Boyon, Nick. (2008). As Gas Prices Near $4.00 a Gallon Nationally, Two-Thirds of American Say they have Changed their Driving Habits. Ipsos.
Kaiser, Emily. (2008). Fuel Spike Curbs Vacations, Dining Out. Reuters.
Carey, Nick. (2008). FedEx Posts Loss; Gives Low Forecast; Blames Fuel. Reuters.
Douglass, Elizabeth & Gaouette, Nicole & Simon, Richard. (2008). Are Commodities Traders Bidding Up Food, Fuel Prices? LA Times.
Sources:
Boyon, Nick. (2008). As Gas Prices Near $4.00 a Gallon Nationally, Two-Thirds of American Say they have Changed their Driving Habits. Ipsos. Retrieved June 18, 2008 at http://www.ipsos-na.com/news/pressrelease.cfm?id=3953
Carey, Nick. (2008). FedEx Posts Loss; Gives Low Forecast; Blames Fuel. Reuters. Retrieved June 18, 2008 at http://www.reuters.com/article/ousiv/idUSWNAS861120080618
Kaiser, Emily. (2008). Fuel Spike Curbs Vacations, Dining Out. Reuters. Retrieved June 18, 2008 at http://www.reuters.com/article/ousiv/idUSN1744550120080618
Douglass, Elizabeth & Gaouette, Nicole & Simon, Richard. (2008). Are Commodities Traders Bidding Up Food, Fuel Prices? LA Times. Retrieved June 18, 2008 at http://www.latimes.com/business/la-fi-traders21-2008may21,0,2916861.story
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