Hi Davidyson,

You're actually describing two separate notions here. 'Demand' is actually pretty well defined in Economics. When an economist speaks of 'Demand,' he/she is usually referring to the amount of goods (or services) that a consumer is willing to purchase at a variety of price points. This is typically represented by a curve on a graph, hence the term 'demand curve' which you may hear in these types of discussions.

Another often-used term is 'quantity demanded.' Perhaps as its name implies, this is the amount of goods (or services) that a consumer demands at a particular price point.

Unfortunately, this definition tends to differ slightly from the every day use of the term which to me implies a certain emotional component which can't be easily quantified. Joseph gives a good example in his post following yours.

The crux of the communication issue in my opinion is not that lay people tend to use different definitions, it is that they do not define their terms sufficiently rigorously. With a good enough definition you could define demand to mean anything at all and if you use it in a sentence I'll be able to understand what you mean.

As for your other point on business investment, you bring up a very good point, but unfortunately exploring how the various actors in the supply chain will be affected by an increase in the price of a commodity is actually a pretty complex endeavor.

Hi Joseph,

I completely agree that the term 'Demand' is frequently misused due to the emotion / desire that you describe.

In response to your question about Economics offering a word for what Simmons is describing, I'm not sure there is a single word per se, but there are certainly concepts which capture what he might be trying to say. I say 'might be trying to say' because it is actually extremely difficult to understand exactly what he is trying to say! My interpretation could be substantially different from someone else's. This is unfortunate, because it just adds noise and confusion to the discussion and detracts from a substantive debate on the merits of the issues.

Having said that, the claim that 'demand will be 88mb with supply 85mb' might be trying to say this:

If prices stay constant, consumer demand for oil will rise to 88mb.
All major producers of oil worldwide are pumping just about flat out right now so supply will remain constant at 85mb.
Therefore the price of oil will rise substantially in order to keep the actual quantity of oil demanded by consumers at 85mb, in sync with the quantity of oil supplied.

This, in my opinion, is a plausible interpretation. However, there are other (perhaps less plausible) interpretations one could make. Another possible interpretation:

The amount of oil supplied in the fourth quarter will remain 85mb.
The amount of oil demanded in the fourth quarter will rise to 88 mb, resulting in rapid draining of inventories followed by widespread shortages.

Note that this is not a likely result given how markets work and that the price of oil is free to move as needed to balance supply and demand, but the fact that this is a possible interpretation should show how careful we all need to be in terms of how we convey this type of concept.

So how would an economist convey the same idea? An economist might say something like:

The global economy will continue its healthy growth in the fourth quarter causing a shift to the right of the demand curve. {A shift to the right of the demand curve implies that for any given price consumers will seek to consume more oil.} However, supply will remain constant, putting upward pressure on the price of oil. {So that supply and demand continue to be balanced.}