Article Analysis Paper of Gasoline Consumption

Topics: Supply and demand, Elasticity, Price elasticity of demand Pages: 3 (839 words) Published: February 1, 2013
Article Analysis of Gasoline Consumption

Gasoline is one of the most demanded resources that Americans count on to get us from point A to point B in our vehicles, and it is also used to help us heat our homes. Ethanol with gasoline can be combined for a blended gasoline, which is better for some vehicles. The following information is from two articles appropriate for this topic. In the first article, “Trends in U.S. Gasoline and Ethanol Use, and Petroleum Production and Imports” by Dr. Robert Wisner, a Biofuels Economist with the Agricultural Marketing Resource Center, states that “Several decades ago, the U.S. was a net exporter of petroleum products. However, that picture has changed dramatically in recent years as gasoline consumption trended upward and environmental constraints on new wells plus declining production from existing wells failed to keep pace with rising domestic demand. U.S. energy policies in the early 1990s were altered to encourage increased production of biofuels, in part because of a desire to reduce the nation’s dependence on imported oil” (Wisner, 2011). The demand for gasoline and oil is unbelievable. Some observers suggest that oil company collusion, anticompetitive mergers, or other anticompetitive conduct (not market forces) may be the primary cause of higher gasoline prices. If the market price of gasoline is higher than the equilibrium price, a negative slope in the demand and curve will result. The negative slope of the demand curve for buyers will mean that the quantity demanded will be less than the equilibrium quantity. A positive slope of the supply curve for sellers will mean that the quantity supplied will be greater than the equilibrium quantity; hence the quantity supplied will be greater than the quantity demanded. If the market price of gasoline is below the equilibrium price will result in a negative slope and if that happens, the demand curve ensures that there will be a greater quantity demanded than at the...
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