In the dictionary, scarcity is defined as "insufficiency or shortness of supply." If you look in an encyclopedia, you'll find this answer: "In economics, scarcity is the problem of infinite human needs and wants in a world of finite resources."
From my previous post, "The Price Is Wrong" I mentioned that we set the price every time we buy something. This is exactly what is happening now to oil and other commodities. Even though prices are increasing, we are still buying. In the past 5 years, 1 liter of oil at a gas station in the U.S. has risen from 30 cents (300 won) a liter to around 93 cents (930 won) per liter. However, the demand has not decreased. This is true around the world. Oil companies and farmers (rice, wheat, corn, etc.) are realizing this.
Let me give you another example. Everyone has heard of Rolex watches right? Rolex watches used to sell for $800 each. That's not cheap, but not insane either. Today, the same watch sells for around $4,000+ each. Rolex realized that customers would be willing to pay 5 times more for the same watch. Why should they lower the price? Instead, they increase the price every year. lol
There's a great article on MSN about the price of a barrel of oil reaching $180. It's around $120 a barrel as I write this. That's a possible 50% increase. If you have to pay 50% more for gas, will you drive less?
On the other side, BP and Shell (Europe's largest oil producers) posted huge profits recently. This is when oil was $111 a barrel. Their profit will be even better next quarter at the current $120 barrel price.
How much oil does the world use? 87.2 million barrels a day. lol
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