oil jumped over 100%. This rise in price of oil did not decrease consumption too much, because oil has no close substitute. So the rise in price resulted in only a slight fall in the quantity demanded. People continue to drive their cars, but some of them switched to smaller ones or use more often public transportation than before, trying to adjust their income to the situation arose. For the most people this rise will make a little difference to how much they will use their cars (Sloman, 1997: p.42). Furthermore the oil for central heating became more expensive as well, and because people, especially during the winter, need central heating, they either use it less or use air-conditioning, as electricity eventually became cheaper! Then again this concerns only few people, thus reduction of oil consumption is not so large. This can be explained through the price elasticity of demand for oil which is relatively inelastic. So what can we do to stop being depended from this cartel ? The history has shown in the previous oil crisis, that development of energy saving technology, taxes and new fuel efficient cars or maybe new oil fields may decrease consumption and make oil more elastic so as to lead prices down. Another hope is that the countries that are members of the cartel, will start to cheat each other and offer more than the agreed quota so as to break this collusion. Certainly the solution so as the price of oil together with the economies all over the world to be stable, is to find a close substitute to it or –better more- a new source of energy supply!...
