Another Journalist Misunderstands Supply And Demand

The article is Oil Is Plentiful, Demand Weak. Why Are Gas Prices Going Up? by VIVIENNE WALT. Here is the opening paragraph which illustrates the problem:

"Storage tankers across the globe may be brimming with oil that no one is buying because of the global economic downturn, but the traditional laws of supply and demand don't always apply to oil prices. Drivers have faced rising prices at the gas pump in recent months, as investors and oil-producing countries hoard supplies in anticipation of a global economic recovery later this year."

Actually, the "traditional laws of supply and demand" do apply. Price is determined by the intersection of supply and demand curves (or lines). But those curves can shift to the right (an increase) or to the left (decrease). One factor that causes a shift is "expectation of future price." Most, if not all, introductory textbooks have this factor. If sellers expect the price of their good will go up in the future (like if there is going to be an economic recovery), then they reduce the amount they offer for sale today. So the supply curve moves to the left and price rises. This is exactly what we teach in principles of economics courses. The graph below illustrates this:



Now the article does discuss the role that OPEC plays. Certainly when cartels are present, and they act like a monopoly, price will be higher. But the basic textbooks predict that, too.