The concept of supply and demand is fundamental to the study of economics, but it’s also a useful tool for understanding many other things that go on in the world. Everybody’s selling something, and everybody’s buying something else. It doesn’t have to be goods or services. It can be ideas, for example, or affection. Supply and demand can even explain how populations rise and fall in nature. When the supply of …something, anything… doesn’t match the demand, bad things can happen. That’s what market corrections are, and once you recognize them, you can see them everywhere, metaphorically speaking.
Oil is a classic example of the way supply and demand play together. Oil used to be very easy to obtain; in some places it practically leapt from the earth as soon as an oil driller made enough of a hole. That meant there was a huge supply of oil, and not much demand for it… yet. Since there was more of it to sell than there were people wanting to buy, oil was extremely cheap. (In 1901, there was so much oil coming out of the ground in Texas that the price dropped from $2 to three cents a barrel.)
It’s impossible to overstate the effect cheap, abundant oil had on the national (and international) economy. This is what underwrote the expansion from cities into suburbs, the mechanization of agriculture (and the fertilizers that sparked the Green Revolution), and the explosion of consumerism. Eventually the demand for oil went up, and the supply of oil fell, so the price rose. More recently, the price of oil was so high that exploiting more difficult, unconventional sources of petroleum products, such as tar sands oil and fracking, became economically feasible.
In the dance of supply and demand, this increase in the amount of available natural gas brought down the price of petroleum products, and the North Dakota boomtowns that sprung up to serve the fracking industry suffered what we might call market corrections. Apartments built in a hurry to shelter incoming oilfield workers sat empty, remaining workers increasingly turned to charity just as donations dropped, and even the dancers in the adult establishments had a hard time making enough money to pay the rent, once the oilmen left town. Things went back to the previous version of normal.
Fracking became a victim of its own success, but because everything is connected, the law of supply and demand affects humans, too. When demand for labor dropped, it meant that the supply of workers was suddenly too big. Market corrections that involve people can be incredibly painful. People may be individuals with hopes and fears and families to feed, but the labor they sell is a commodity now, just like oil, and when nobody wants what you have to sell, you must find some other way to live.
Similarly, but somewhat more lightheartedly, the law of supply and demand is also at work in the dating market. Put bluntly (and very generally), sex, as a commodity, is demanded more often by males than females. Because women have the most to lose by engaging in sexual activity, the female (assuming a heterosexual couple) will be the gatekeeper who decides when sexual encounters will first take place. If there are more females around (such as on some college campuses), if there are other potential ways for males to scratch that itch (such as widely available porn), or if there are fewer costs for the female to supply it (such as when using birth control), the price of sex is relatively low for the male, and premarital sex will be more common. When the social cost of sex was high and the consequences stark, marriage used to be the price for sex, but less so now.
The Economics of Sex, by The Austin Institute for the Study of Family and Culture
When marriage is no longer necessarily the “price” paid by the male for sex, fewer marriages will occur. Women may be the “suppliers” of sex, but men are the “suppliers” of the valued, more expensive commodity of marriage. Just as the price of oil fluctuates with supply and demand, resulting in market corrections (like unemployment) when the two are not in sync, so too is there a “market” for potential mates. Dating market corrections, like a reduced marriage rate, premarital sex, or a shift in the balance of power between the genders, occur when one commodity or another is in relatively high or low supply. This changes how the “commodities” each party offers are valued, and sometimes the volatility of the price changes (financially, as in oil, or otherwise) can have far-reaching effects, personally and socially.
Understanding how supply and demand works, and how market corrections can be painful even when they have nothing to do with money, leads into tomorrow’s continuation of this metaphor.