The factoid thrown around is that roughly 20% of the world’s oil supply travels through the Strait of Hormuz. Since it closed, my local gas prices in one area of the US midwest have gone from $2.60 to now $4.10 presumably as reserves have been used up.

I could understand a 20~30% increase in price to correlate with the reduction in supply, but what are the economic factors that lead to what feels like such a disproportionate increase?

you are viewing a single comment's thread
view the rest of the comments
[+] -33 points 6 months ago (6 children)

What econ101 does to your brain is not normal. Into to Econ has y'all seeing a sinking ship and the first thing to ask is "how much is this life jacket worth in dollars"?

  • source
  • parent
  • hideshow 6 child comments
  • [–] 13 points 6 months ago

    Completely agree, actually.

    This isn't what I think someone should do. It is morally abhorrent. This is just a contrived scenario to try and prime an intuition to help OP understand why small changes in supply can have outsized effects on price.

    If at any point someone sees human suffering or danger and thinks "profit opportunity", I have a hard time understanding why that person should be permitted to continue to participating in society freely.

  • source
  • parent
  • [–] 8 points 6 months ago (4 children)

    It's a contrived example.

    This isn't hard to understand

  • source
  • parent
  • hideshow 4 child comments
  • [–] 2 points 6 months ago (2 children)

    Yes exactly. Replace the life jackets with Pokémon cards and the moral dilemma goes away. Cruise ships are required to carry enough life jackets and to give them to the passengers for free in an emergency. If someone is selling life jackets on a sinking ship then society’s rules have broken down, and it wouldn’t be surprising for people to get violent as they struggle to survive.

  • source
  • parent
  • hideshow 2 child comments
  • [–] 3 points 6 months ago (1 child)

    Replace the life jackets with Pokémon cards and the moral dilemma goes away.

    If I'm on a sinking ship, I don't think I'm really going to be caring about Pokémon cards.

  • source
  • parent
  • hideshow 1 child comment
  • [–] 1 point 6 months ago

    No, of course not. But that’s not a very charitable take, is it? Obviously the sinking ship situation goes away with the life jackets and the setting for buying the Pokémon cards is more typical, like a convention or a hobby store.

  • source
  • parent