McGregor Says: The law of supply and demand

I was somewhat surprised recently to see the price of gasoline shoot up six cents a litre overnight.

Later that day on the news, I heard the explanation. I am not kidding, the price increase was due to the occurrence of the solar eclipse.

It seems that with the expectation of tens of thousands of people flocking to Oregon and the Pacific Northwest to view the event, there would be a significant increase in the demand for gasoline.

Officially, Big Oil stated that when there is a sudden increase in demand in a region the costs of increasing the supply to that area are also increased.

We learn two important facts here: Astronomical events leads to astronomical price increases, and the oil industry believes we are all naïve idiots.

I have sat in my share of boardrooms and strategy sessions, and I can assure you it happened like this in the Big Oil boardroom.

“Say, Bob, did you know there is going to be a total eclipse of the sun visible in Oregon and they are expecting huge crowds to travel there to watch it?”

“Well, Tom, that is great news, they are going to be buying lots of gasoline, we had better raise the prices.”

“That’s what I thought. I have a chart and graph here that shows on the demand curve, a movement denotes a change in both price and quantity demanded from one point to another on the curve. In other words, a movement occurs when a change in the quantity demanded is caused only by a change in price, and vice versa so we can use this to determine the increase.”

“Tom, I have a better idea.”

Bob goes to the wall, opens a big cabinet to reveal a dart board with numbers on it.

They do rock, paper, scissors to see who will throw the dart, count down — three, two, one —and watch the dart land on $142.9.

“Send out the memo, Tom. It will be that price for a week, then we’ll drop it for a few days and push it back up for the long weekend and back-to-school.”

Having just made billions of dollars for Big Oil, they high five each other and head to the bar to celebrate.

We are pawns in the big chess game of life and there is little we can do about it. In B.C. we have no idea how much oil we have in Canada because the oil is in Alberta but our dip sticks are in Ottawa.

Recently, the Environment Office predicted 18 major hurricane-force storms will hit the Florida and the east coast over the next eight weeks.

Overnight, the price of oranges and orange juice rose dramatically and nothing has even happened yet.

I have no doubt that Big Oil and Big Banks are experts at eclipses because they have been keeping us in the dark for years.

At least that’s what McGregor says.

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