Tuesday, March 19, 2019
Gas Price Elasticity Essay -- essays research papers
drift Price ElasticityThe free energy discipline Administration of the Department of Energy began tracking weekly gasoline prices in 1990 by means of a survey of 800 service stations somewhat the country. The average retail price for unleaded gasoline posted its quarter record high during the week of June 12, 2000, increasing 5 cents a congius to an average of $1.681. The price at the pump is higher than the same goal last year by 56 cents and has risen 16.2 cents over the one-time(prenominal) month ( unnamed, 2000).How far go out it rise? What will consumers do around the striking increases that are occurring with the arrival of each shipment? Price grab of demand would indicate that demand will fall as prices hold open to rise, which in turn should result in a reduction of prices and a subsequent increase in demand. Such may prove to be the case, scarcely the scenario is an unlikely one.Prices have got increased all over the country, provided price increases in the Midwest have been even more dramatic than in other areas. Across the region, prices are averaging $1.874 for a congius of unleaded, but that same product is well over $2 a gallon in many of the cities of the Midwest. Higher grades average $2.003 across the region, marking the first gear time that average prices have been so high in a specific region of the country ( nameless, 2000). There is so much business organization over the rising prices that apparently are continuing to rise without relief that the Federal Trade Commission (FTC) has "opened a formal probe into soaring gasoline prices in some areas of the Midwest and will begin issuing subpoenas to oil companies by the end of the week" (Hebert, 2000 p. aol).Sen. Richard Durbin, D-Ill. believes that the oil companies will reduce prices right away once the subpoenas begin to appear, and the countrys vice death chair has mentioned that collusion may be behind the oil companies huge lucre this year (Hebert, 2000). The summer driving season always brings higher prices in response to heightened demand, but never to the extent seen this year.Of go the final personify of gasoline at the pump is affected by the price of a barrel of crude, but to a lesser extent than oil producers would have consumers believe. The price of crude accounts for simply 30 percent of the final woo to the consumer (Brodrick, 2000a). In 1981, the terms of crude accounted for 62 percent of the final c... ...evert to prescript levels following the world oil shortage in the 1970s, but of course that never happened. Because the government controls more than 37 percent of the final cost, only 63 percent of the cost is open to being affected by market forces. Gas is a low elasticity product for the reasons discussed higher up the wonder is that it does not cost even more at the pump.ReferencesAnonymous (2000). Economics 52 - Using Price Elasticities to Forecast Prices. At http//nimbus.temple.edu/glady/GasPrice.html.Ano nymous (2000, June 19). Record Gasoline Prices for Fourth Week in a Row. Reuters at www.aol.com.Anonymous (2000). The Strategic Petroleum Reserve. US Department of Energy, Fossil Energy at http//www.fe.doe.gov/spr/spr.html.Brodrick, Cynthia E. (2000, February 15). How do gas costs affect consumers? At http//aol.thewhiz.com/2000/02/000215d.asp.Brodrick, Cynthia E. (2000a, February 15). The cost of a gallon of gas. At http//aol.thewhiz.com/2000/02/000215b.asp.Georgy, Michael (2000, June 20). OPEC Prepares To Raise Oil Exports Again. Reuters at www.aol.com.Hebert, H. Josef (2000, June 20). FTC Opens Gas Price Investigation. The Associated Press at www.aol.com.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment