Oil prices

Megan McArdle links to a very useful chart at WSJ Online, saying:

One of the things that I was struggling to get across at a dinner a few weeks ago is how discontinuous prices on inelastic goods can be. That is, a few percentage points increase in demand against a relatively fixed supply doesn't produce a few percentage points increase in price: it can produce huge spikes. That's not intuitive; we feel as if prices and demand should grow at approximately the same rate. But people in the world have a lot of spare income they can use to bid up the price of oil; the speed with which its price is increasing is a measure of just how useful the stuff is.

Part of the problem is that most media folks are too young to personally remember the first two oil crises, so that the current situation is unique in their collective experience. They communicate that in so much of their coverage of the oil market and the political ruckus influencing it.