Everyone's Gasoline Problem
1.Everyone’s Gasoline Problem. We are all familiar with fluctuating prices of gasoline at the pump. Why does this happen? Research the recent history of gasoline pricing in your area, and attempt to relate any fluctuations you observe to documented supply and demand factors, as outlined in our book. Be sure to cite any references used. The price of gasoline at the consumer level is the result of a combination of factors: the price of one of the largest bulk commodities (transferable goods), the crude oil and the cost of producing and marketing gasoline affect the fluctuation in gas prices. Billions of people around the world rely on the crude oil for transportation; therefore, the value is influenced by its utility, supply and demand (market
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For example, if we consider the gasoline prices during 2007-2011, we can see that, in 2007, the gasoline price was $2.9/gallon. In 2008, the price went up to $4.40 /gallon, which was a 51% increase in gasoline price from year one. Then during 2009the gasoline price went down to$3.00/gallon, representing a 31% decline in gasoline price. In 2010, the gasoline price increased to $3.20/gallon, and there was a 6% increase during February 2011 to March 2011, leading to 11% fluctuation in the price. From 2011 through 2012 the price went up from $4.20 to $4.35, not a big significant increase, and from this point to April 2013 there was a decrease to $3.90[2, 3], which has been helpful for the economy for the past …show more content…
Therefore, the relationship between demand and supply determines the prices of gasoline. When reduction in supply occurs while demand rises, prices increase quickly. However, prices decrease when the opposite occurs. When prices are too high, the result is surpluses that drag prices back down to their equilibrium price for oil. When prices are too low, the result is a shortage of oil. Oil occupies about 40% of total consumption of global energy which expresses how dependent on oil people are and the extreme need to maintain a
For example, if we consider the gasoline prices during 2007-2011, we can see that, in 2007, the gasoline price was $2.9/gallon. In 2008, the price went up to $4.40 /gallon, which was a 51% increase in gasoline price from year one. Then during 2009the gasoline price went down to$3.00/gallon, representing a 31% decline in gasoline price. In 2010, the gasoline price increased to $3.20/gallon, and there was a 6% increase during February 2011 to March 2011, leading to 11% fluctuation in the price. From 2011 through 2012 the price went up from $4.20 to $4.35, not a big significant increase, and from this point to April 2013 there was a decrease to $3.90[2, 3], which has been helpful for the economy for the past …show more content…
Therefore, the relationship between demand and supply determines the prices of gasoline. When reduction in supply occurs while demand rises, prices increase quickly. However, prices decrease when the opposite occurs. When prices are too high, the result is surpluses that drag prices back down to their equilibrium price for oil. When prices are too low, the result is a shortage of oil. Oil occupies about 40% of total consumption of global energy which expresses how dependent on oil people are and the extreme need to maintain a