It's pretty ridiculous how oil prices can go from $250 to $90 in less than 24 hours. At $250/barrel an oiler could to pretty well.. but for some reason there are just so many n00bs who think its a good idea to undercut by $100+... 50% discount are you kidding me?!

Yawn!

Naptime?!

LATC, the price went down because supply is more than demand...

If there was enough demand, the price would have remained at $250.

Also keep in mind, the price went up from $90 to $250 in a day, which was highly unusual to begin with, indicating inflated demand, and not real demand.

haha yes I understand supply/demand, I was an econ major. But the fact that ppl under cut by so much is what's annoying. I mean in the real world, when theres a oil surplus the price of oil comes down slowly. And when there is a deficit prices go up fast. But then again real world oil companies are all in agreement with each other when it comes to pricing =/

You were an econ major? You missed a lot in class didn't you? See Xin's response, and have your school Paypal him the tuition you paid.



Or you can put up your oil at $250 and come tell us how you fared same time next week?

early in the set breaks are low enough that even with everyone grabbing, not much oil is being used. in a week or 2 when people are 10m jet breaks youll see oil prices rise.

the only thing people running Oiler as a strat accomplish is ensuring that Oiler is untenable

It's the amount ppl undercut by at a time that I'm referring to.

There are a few other factors that make EE an imperfect market example and thus economic theories aren't perfect.

1. Many n00bs in game who aren't trying to maximize profits
If the price is at $250 why would someone sell at $90? Why not sell at $249? And then $248? etc. until you reach an equilibrium? In the real world that's what happens because corporations are trying to maximize profits. In EE there are just too many idiots who are just trying to sell their crap so they'll sell at whatever price they want, even at a 50%+ discount.

2. The 6-8 hour transit time to sell vs. real-time bid system.
Sellers who want to sell their oil right away will sell at the current bid price hoping the bid is still there when their goods reach market. On the flip side, because bidders have to wait at least 6-8 hours to have their orders filled most don't use it but rather they'll buy at the market price. So the bid price isn't an accurate representation of what ppl are actually willing to pay. So even if demand pushes equilibrium price up, someone with a lot of supply who always sells at current bid price will just keep pushing the price back down because their supply is more than the bid qty (since so few ppl use it) and thus the market price is lowered, and each subsequent person then sells at a lower price of that big block. If both were real time and all buyers use the bid system then yes, real world economics would make sense (see stock market) and the bid vs ask price would differ by a few dollars, that's when you'd get a true equilibrium. The 6-8 hour goods to market time also means ppl aren't selling at the optimum price. Because sellers don't know what prices will be in 6-8 hours they'll undercut by more than $1 at a time, hoping they are the lowest price when their goods reach market - thus an imperfect market (though it still doesn't make sense to undercut by 50%+).

3. And most importantly: No price floor + n00bs who don't know how to calculate a competitive price per barrel to other strats to figure out the floor.
With no private market to buy or sell oil there is no obvious price floor, so n00bs just sell at whatever price they want. I did the calculation a few resets ago, from what I recall a fascist with equal amount built in farms and rigs and no agri tech would make the same amount of $ if they sold oil at about 3x food price. And because most farmers have tech, oil prices should theoretically have a floor at a minimum of 3x food price for it to be a competitive strat. If all oilers knew this, then the price of oil should start at the floor price every round - and if every oiler was aiming to maximize NW then no, the price wouldn't go down because ppl are still going to make the same LG if oil price is $70 or $150, aka demand is essentially constant round to round depending on when in the reset you are at (assuming same # of players).

You're not reading LATC.

If the price rise from 90 to 250 in a single day is real in the sense that the real equilibrium price is 250, it wouldn't have happened in a single day. It might have risen 50 dollars a day over a few days, but it would not have tripled overnight.

The price returned to 90 so fast because it is the real equilibrium price to begin with before it temporarily spiked to 250 for half a day.

Now if $250 was the actual equilibrium price to start with, I would have agreed with your 3 points, but it wasn't.

Essentially what I'm arguing is demand for oil is inelastic - ppl won't buy more if price drops, ppl won't buy less if it rises - instead they'll buy what they need for each hit. Therefore its up to suppliers to determine price (Look at medicine prices in the US).

Also crest23, things you learn in B-School or econ are based on perfect world scenarios in a vacuum enviornment. I started my first business venture when I was 18, there are ALWAYS more factors to consider in the real world, otherwise every business should succeed if management ever took a single business class. So before you go insulting ppl, learn to look at the whole forest and not just a single tree.

Xinhuan, oil price equilibrium is arbitrary due to what I mentioned above - oil is an inelastic good. If price of oil started at $500 in the reset and everyone only undercut by $1 at a time, "equilibrium" for oil today would be in the $400's. In the end it's the average oil price from past resets that makes ppl think the 'normal' price should be $90 this early in the reset.

You are one funny character. If the equilibrium price of oil is indeed $250, your oil would sell when you placed it at $250. Regardless of what these "noobs" do. THERE IS TOO MUCH SUPPLY. I don't know where you went to school, but I'm sure your business venture shut down fairly quickly when you tried over pricing your goods.

These "clueless noobs" outplaying you obviously.= since they understand Economics way better than you.

Also, have you played Express at all? The time to market there is 15-45 mins. The market there is pretty volatile so your #2 point is baseless. Like Xin says, READ. You seemed to have made it through college without reading much.

that doesn't work LATC, you're not gonna form some sort of OPEC oil cartel, and if you did, and you artificially inflated the price above the market price, unless there was the perfect magic number of oilers it wouldn't all sell and some of y'all would be stuck. plus, it's not inelastic, some people attack less, or store turns, or build rigs.

Oil is not inelastic.

If oil was at $250 equilibrium today, I would keep each and every single oil rig I grabbed instead of tearing them down. If oil reached $300, I would build a few hundred rigs.

Oil reached $700 average for about 1.5 weeks 4 resets ago (Jan-Feb 2012), with a peak of $950ish, all the top 20 countries built 2k-3k rigs in response.

Furthermore high oil prices means higher costs of grabbing, which can cause people to grab less because they can't afford it.

also, like, let's say you did form a cartel, and everyone sold for $250, never less. and let's even assume oil is inelastic (even though i already explained why it's not). would all the oil get bought? if it would, what if 10 more people decided to go oiler? would it still all get bought? or would a lot of it not sell? and would prices have to drop? just like they did :)

"It wouldn't all sell and some of y'all would be stuck" That's true regardless of price though. And it would only be at the very end of the reset where it matters, it's like musical chairs.

"It's not inelastic, some people attack less, or store turns, or build rigs."
Most people would not change who they grab just because oil price is higher than "normal". In all honesty, would you hit someone w/ less D (and probably less NW so lower returns) just because oil is $250 instead of $100? And due to a limit in # of turns you can have, you can only store turns for so long, so it's a matter of who is more patient, buyers or sellers. Yeah some ppl will build rigs, but it's not worth for most strats. Basically the ceiling price of oil should be cost of building 1 rig vs a strat's bldg (IC, bus/res, labs, MB).

Crest23, grow up, learn to argue without personal insults. Like I said, oil isn't a perfectly elastic good. I guarantee you if I put my 3m oil at $50 (vs the $145 it's at now) the same amount of oil will sell and equilibrium price will drop (assuming there's no one trying to drive prices up artificially by doing buyouts) because excess oil is useless sitting around in a country. In express there is still a delay. In 15-45 mins the price can vary a lot so you still play it safe and sell lower. Not sure how old you are, but have you ever had to trade in the stock market w/ a 15 min delayed quote?

Xinhuan, I agree with your point. So the question is at what price would ppl start building rigs?

huh? it would matter all set long because if no one is buying your oil you can't play your turns

So oil was $145 half an hour ago, then $125, and now $100. Are you telling me that ppl weren't buying and were waiting for the price to drop to buy? Forgot to mention earlier, lack of volatility also prevents true equilibrium price from being achieved (hence market makers in the stock market for low volatility stocks).

blid: I'm more than certain ppl will still buy the same amt up to a certain price.

And fine let me ask you the flip side, if oil was cheap, would you buy more or buy what you need?

yeah, up to a certain price, but if there's too many oilers, and too much oil, people have to undercut or be left out to dry. also not mentioned so far is standard strikes. ill do a lot more standard strikes if oil is $100 than if it's $300.

Do you know what happens to Fascs when oil goes crazy? The CIs take you to the woodshed.

Also, the market has answered your question.

If oil was cheap, I could buy more if I anticipate the price wouldn't last long. On the other hand if I felt it would go even cheaper, I would wait.

They do not, I ran an oiler last reset and I was hit more early on when oil prices were low because I couldn't buy enough defense vs when they were high and it wasn't worth hitting me.

The market has not answered anything. It just said there's very low volatility.

That depends entirely on 4 factors:
A) Estimated teardown + rebuild costs of said rigs (this depends on my current land size).
B) Number of turns I expect to keep those rigs around before I tear them down to rebuild.
C) Whether I am still grabbing aggressively.
D) The number of days I expect oil to remain above the threshold price based on all 4 factors (A, B, C and D)




A) Some people are waiting, yes. I have on occasions waited for oil to be $100 cheaper (say $350 to $250) before grabbing.

B) SOs are a means causing prices to go towards equilibrium. The current SO price that are publicly available represents how much people are willing to pay at maximum in preparation for the following 1-2 days, so people will be more inclined to sell just 10-20% higher than the prevailing SO price. If you really wanted to push up prices, you would put up an SO for 1 unit of oil to cause people to think there is demand for higher priced oil artificially, and it might work to increase it slightly due to human perception until the SO fills. (Fairly common tactic.)




Yes, if I expect to use those oil in the near future and have the spare cash for it AND expect oil price to rise up in the immediate future.

The problem is, while this creates additional oil demand initially, it simultaneously reduces oil demand by the same amount for the subsequent days since I'm already stocked up, so oil speculators might be reading the market wrong and price oil too high in the coming days and be surprised their oil didn't sell.

The problem is still SO's are real time and sell price is delayed 6-8 hours. If I'm going to make a grab, I'm not going to put up a SO and wait 6-8 hours for it, instead I'm going to buy what I need at the moment if the current price is anywhere decent.

I often put a fake 1 order of oil at $1 under what I'm selling at. But I don't know what ppl have sold at in the past 6-8 hours so it often gets wiped by someone selling at the previous ridiculously low price.

"A) Some people are waiting, yes. I have on occasions waited for oil to be $100 cheaper (say $350 to $250) before grabbing."

What makes you wait at $350 though? Isn't it because you've been conditioned, based on previous resets, to believe that $350 is expensive? What is 1 barrel of oil really worth?

"The problem is, while this creates additional oil demand initially, it simultaneously reduces oil demand by the same amount for the subsequent days since I'm already stocked up"

^Isn't that saying oil demand is inelastic in that the qty used in a reset remains constant regardless of price (up to a point)?

We already agreed that oil is NOT inelastic. 1 barrel of oil is worth what the market says it is worth. Also, you don't have to put out an SO and wait 6-8 hrs. You know you can put out an SO and see if it took on your next log in the next day, right?

Oil is elastic as I've explained in previous posts.

"When a price change has no effect on the supply and demand of a good or service, it is considered perfectly inelastic." I have reasoned 2 replies ago, given many reasons, that oil price affects demand, though it may not affect supply (it can affect supply, people who stock oil may choose to dump oil).


Furthermore, the elasticity of oil is dependent on whether I buy the oil for tomorrow's grabs today, or buying it tomorrow. If oil is cheap today, I buy it today. If it's expensive today, I buy it tomorrow. That demonstrates elasticity, because when price goes up, demand goes down, and vice versa.

That fact that the same amount of oil got sold is irrelevant and doesn't prove inelasticity, I wasn't willing to pay the higher price if I could _potentially_ buy it at a lower price, and I was willing to take the _risk_ for it. [Edit: The demand changed to be higher today, but lower tomorrow because oil is cheaper today but predicted to be higher tomorrow - if this isn't proving elasticity, what does it prove?]


$350 was because it was the daily's peak price then, and the last 24 hours of oil was only at $250, (i.e eestats said the price was ranging from 200-350), so I could afford to wait a couple of hours for 200-250 oil to reach the market, and I didn't expect the price to stay at $350.

You have to study the market trends.

Also, I'll like to point out that a reset is 60 days long, if you are looking at economics at the scale of "60 days" as "one unit of time" when calculating elasticity, then that's just stupid.

I could say that food demand is inelastic too, by your theory, since the qty used in a reset remains relatively constant. And the amount of turrets, etc.

Yes, you can say that oil is "less elastic" than food, so it is relatively inelastic, but to say oil is inelastic is just wrong. People will choose to stock oil instead of food if they believe it is profitable, and that alone is enough reason to cause price spikes and price crashes - the effects of supply and demand on a day-by-day basis - not a "60 day unit of time" basis.


======================
The real reason why oilers do not place top 10 is because of the way oil price peaks and falls, it typically peaks in weeks 3-5 because that's when the largest amounts of grabbing are done (at higher and higher land sizes and jet amounts), but because good players don't play oilers, the oilers remain relatively small in size in the bottom half of the ranks and the oil supply doesn't grow to scale with the increasing demand for oil.

Once week 5 passes, people stop grabbing and start stocking, oil demand falls, particularly people with oil stocks trying to get rid of it, if you are trying to stock as an oiler, it is simply just less efficient than being a farmer BECAUSE the oil demand simply isn't there to cause oil prices to be anywhere remotely near being competitive from week 5-7 of the reset in the stocking phase.

Conclusion: Less people need to play oilers for oilers to be competitive. Or an artificial oil floor price has to be introduced (oil PM price) at a significantly high enough price, which simulates an infinite demand for oil at that floor price. Or an increase in oil demand in the form of raising the oil needed from 1 oil per 25 units to 1 oil required per 10 units or even less.

Our economics professor getting schooled by a software engineer. Engineers rock! Xin, have you gotten your tuition payment yet, lol.

I get what LATC is saying. Because there is no set value for oil as there are other goods in this game, oil's value really depends on each person's perception.

If you look at EEStats charts for oil in the past resets, if oil is elastic then the qty sold/day vs price should be inverses of each other, which they are not. Also as LATC mentioned, the true equilibrium price can't be attained with the 6-8 hour delay in selling goods. In a perfect equilibrium where both are real time, bid price should be $1 short of ask price because sellers will bring the price towards bid price and bidders bid it up to ask price and then it fluctuates in a tight range. This delay causes imperfect information in the market. Sellers know the price buyers are willing to pay at the moment, but only know what other sellers were willing to sell at 6-8 hours ago. You can't have a bidding system with a 6-8 hour delay and expect it to be perfectly efficient.

And for real crest23, stop brown-nosing, it's disgusting.

They are not true inverses of each other because both supply and demand curves moves to the right daily in the first few weeks, leading to a gradual price increase. That is, both supply and demand are rising.

Demand rises faster (players grow and need more oil to grab) than Supply (oilers don't grow as fast because top players rarely play oiler), but both are rising. This results in a price overall increase.

Oil is definitely elastic, otherwise people wouldn't be stocking and speculating on it.

Just because price vs qty sold/day aren't inverses of each other doesn't indicate a good is inelastic. There is increasing demand for oil despite the increasing oil prices (which would cause a demand drop) because the additional income from land gains resulting from grabbing is far superior. The increasing demand for oil due to external factors (for grabbing) far exceeds the drop in demand caused by oil price rise.

Before stocking phase oil is not elastic. Very few ppl stock oil the first 5 weeks in primary.

I think we will agree to disagree then.

Oil is elastic. But it is not as elastic as other goods like tech points in the first 5 weeks of primary. People WILL grab less if oil is higher priced, do less SSes and more PSes, seek out O-allies to help lower oil costs, keep grabbed rigs, and even potentially build some rigs.

All of the above help to reduce the amount of oil that players need to buy from the public market (reduced demand), and are direct consequence of increasing oil prices, thus oil is elastic.

Yeah I guess in the end its about perception based on how we each play. I don't generally let oil price affect the way I grab (unless its like $500+) because I always PS. I also NEVER use O-allies cuz the majority of O allies I've ever had also always PSed, so no one benefited. So for me if oil is under $500 I consider it inelastic personally, but it looks like other ppl perceive it differently.

It just occurred to me that we might be arguing about semantics, since a good is "inelastic" in a literal sense if the ratio of (change in price)/(change in demand) is between 0 and -1.

If this is so, pretty much almost all market goods in this game are inelastic until week 8, and oil after week 5 (where you would be correct).

If oil was at $300 for an extended period I would build rigs.

I had 700k oil stocked on my first attacking day "P

It matter less the number of people that stock oil before the stocking phase as to how much oil is actually stocked compared to what is available and if it is stocked for use or as a buyout for resale.

and one thing here in primary as well is that people dont stock more oil for war since there are no wars except for big grabs/retals or random suiciders BRing, GSing, etc.

I get what LATC is talking but that won't work on this game's market.
And like you said, goods here have delays in market.
The response of price to the demand won't be similar to real world.
And it's not always the noobs that crashes the market.
Some players who benefits from it do.

$499 is too much. I can stock turns for a day and place an order. Someone will under cut you.

In a day it will be $550!

$1 BILLION DOLLARS!

It's funny how we were just discussing this and then oil jumped by so much.. guess we'll see whose theory is right.. tho I agree even this is quite high of a price for oil

Well, in the last 6 hours 1m barrels have sold.
In the last 24 hours 5m barrels have sold.

So the demand is already seeming to drop as people hold off or refuse to buy the expensive oil

Sigh and someone decided to sell at $250 when the market price is $499... I sold 740k in the last 12 hours @ $499.. not sure why someone would sell at half that right away

People will just store turns rather than buy oil at $499. Oil can't be sustained at $499.