Posted on 07/12/2017 9:37:55 AM PDT by Kaslin
It was in response to statement that supply cannot increase demand when it can if necessary price reduction is made to then releave the oversupply.
The first ton of coal produced is likely to cost more than the final ton. If a business believes that they will never be able to profitably operate, then it makes sense to shut down.
However, the fact that one might initially have to suffer a loss in no way proves that a profit cannot be made. The marketplace has no obligation to make guarantees to producers. It is up to the producers to make an evaluation and act accordingly.
>>>However, the fact that one might initially have to suffer a loss in no way proves that a profit cannot be made. The marketplace has no obligation to make guarantees to producers. It is up to the producers to make an evaluation and act accordingly.
And the coal companies have been doing that analysis. That is why production has decline over the last decade.
Haven't the federal regulations regarding coal also played a part? Imagine the enormous expense of having to shut down an operating coal plant and replace it with a natural gas plant. What would be happening without government interference and what might happen in the future without such interference?
Well, as you should know, in the energy field, that statement is absolutely untrue. Supply of one form of energy, say natural gas, oil or whatever, increases, pricing goes way way down as it tends to do (from $120 or more to $40 or less in the case of crude oil) and then what happens? The cheap price keeps users from switching to alternative forms of energy. Consumers don't spend extra to buy an electric car because gas is cheap. They choose gas appliances over electric. They don't spend tens of thousands for solar panels on the roof when their bills are low. Electricity companies use coal instead of some other way of making electricity. Nuke plants are not economical. Wind farms aren't needed. So yes, demand does go up if supply of this kind of commodity goes up. Pricing can go down to the level where it is economic to produce the commodity. If pricing tries to go below that level, what happens next, class? Bueller? Bueller?
I wasn’t speaking of the product produced by the supply item I was speaking about the item producing the energy in this case coal.
Thanks, sincerely.
Thank you.
“Say’s Law—the idea that ‘supply creates its own demand’—has been a basic concept in economics for almost two centuries. Thomas Sowell traces its evolution as it emerged from successive controversies, particularly two of the most bitter and long lasting in the history of the discipline, the “general glut controversy” that reached a peak in the 1820s, and the Keynesian Revolution of the 1930s...”
https://www.barnesandnoble.com/w/says-law-thomas-sowell/1120011573#productInfoTabs
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