Below is the supply and demand curve that we review when observing gasoline prices going up in the field. Basically under normal conditions we see the equilibrium price being where supply intersects demand at EQ and EP. However, as we experience issues where manufacturers end up not supplying as much fuel as before we see supply shift to the left and this is seen in the supply graph S2. We also see equilibrium price move up because of this from EP to EP1. An example of such an incident occurred during the Katrina Hurricane back in August 2005. The hurricane damaged the 30 oil platforms and the closure of nine refineries. This reduction of oil production reduced the amount of supply of gasoline for the nation. Thus rising the price of gas nationwide.…
a. The effects of a long-term capital lease on a lease are much like that of equipment purchases using installment payment debt. This type of lease transfers all the benefits and risks to the ownership is accounted for as an asset and liability incurrence by the lessee. If a lease is classified as capitalized, both the leased asset and the lease obligation are recognized on the balance sheet.…
Holt, Matthew T. American Journal of Agricultural Economics,1992 , Feb92, Vol. 74 Issue 1, p10, 11p, 4 Charts. Retrieved (2011, January 11), from EBSCOhost database.…
* According to Colander (2010), the market and equilibrium changes that have occurred to the supply (oil) by assuming that the demand stayed the same. It revealed…
Hence, there is doubt that the economy of the United States suffered its dramatic damages. The figures provided by The White House indicates that the unemployment rate doubled from 6 to 12 percent in the most influenced areas of Louisiana and Mississippi during the time of crisis which was between August and September. The salaries and wages went down sharply by about 1.2 billon dollars in the third quarter of 2005 (Chapter One: Katrina in perspective). The storm also demolished 113 offshore oil and gas platforms, damaged 457 oil and gas pipelines, and discharged almost as much oil as the Exxon Valdez oil disaster. This affected 19 percent of U.S. oil production; therefore, the cost of oil and gasoline rose considerably by 3 dollars a barrel for oil and 5 dollars a gallon for gas (Amadeo 2012). The joined effects of both Hurricane Katrina and Hurricane Rita, which made landfall soon after Katrina in the outskirt of Louisiana and Texas, resulted in the total number of 114 million unused oil barrels. This number was equal to over one-fifth of the annual output of oil production in the Gulf of Mexico (Chapter One: Katrina in perspective). Additionally, according to the reports of The Department of Energy, this powerful storm made roughly 2.5 million customers suffer from power outages (Chapter Four: A week of crisis). The damages inflicted by the hurricane in the economy can be found in the…
According to Art Carden, after natural disasters, prices provide a valuable “signal flare” about what is:…
St. Atanagio is a remote island in the Atlantic. The inhabitants grow corn and breed poultry. The accompanying table shows the maximum annual output combinations of corn and poultry that can be produced. Obviously, given their limited resources and available technology, as they use more of their resources for corn production, there are fewer resources available for breeding poultry.…
"Disastrous Spending: Federal Disaster-Relief Expenditures Rise amid More Extreme Weather." Name. N.p., n.d. Web. 27…
When people are notified of such a catastrophe that is about to break loose, they will have to initiative to stockpile as much necessities as possible because their survival is their number one priority. However, stockpiling is one of the most detrimental things to do because it only leads to inflation of prices and will only lead to shortages as products become more scarce, according to (Mayerowitz, “Time to Stockpile Food”) Also, there has been a trend most notably seen in Hurricane Katrina, in which only 84% of those that were evacuated returned one year after resulting in a loss of labor participation from these displaced workers, also those that did return suffered from not fully participating in the labor market some jobs, unable to fulfill work tasks as the producer which affects the market. ("The Workforce and Economic Recovery: Effects of Hurricane Katrina." 1) Gasoline is a vital resource to everyday life and when it is suffering from shortages, businesses may observe a small peak of growth, however, in the long term they will be thoroughly impacted. Recently, in Florida there have been gas stations completely running out of gas and the fact that shipments might be delayed only makes the dilemma even worse. (Ostrowski, “Gas shortages, long lines as Hurricane Matthew looms”) These are just the many hindrances a hurricane has to offer, and it hasn’t even started…
[7] Dempsey, Judy. “A warning for Europe amid fears of gas crisis.” International Herald Tribune. February 16, 2006. Available at: http://www.iht.com/articles/2006/02/16/business/energy.php.…
hurricane. The manufacturers of equipment see an unexpected increase in sales, their inventories drop below the desired level and they react…
“After a protracted last-minute budget fight with Congress in December, President Clinton signed legislation containing $1.7 billion in funding for the Low Income Home Energy Assistance Program (LIHEAP), the federal government 's primary source of energy assistance for the poor. The amount represents a cut of $300 million from the $2 billion appropriated for FY 2000, the previous fiscal year,” (Energy Assistance/LIHEAP). The energy advocates are now worried that with the increased energy prices, the need for assistance will increase and there will not be enough money to help. The Department of Energy estimates that home heating oil prices could be 30 percent higher this winter than last, and that natural gas prices could be 40 percent higher (Energy Assistance/LIHEAP). The…
Proposing a theoretical situation, if an earthquake destroyed capital stock but left the labor force intact, the real rental price of capital would increase. The real rental price equals the marginal product of capital and having less capital stock available raises the marginal product of capital and therefore, raises its real rental price. This situation would also make the labor force larger in relation to available capital. Since this would lead to a declining marginal product of labor as workers have…
However, what they don’t realize is that when price gouging laws are legal then all goods are sold based on the theory, first come first serve. When prices are the same in a state of emergency this allows consumers to buy products in bulks which leaves none left for anyone else. Another concern people have is that the poor people will be discriminated against because of such high prices for necessary items. However, passing laws against price gouging doesn’t guarantee that the poor people get necessary items, and these laws discourage businesses supplying these essential items to the market. Art Carden said in the video titled Is Price Gouging Bad, that he believes a law against price gouging is going to prevent people from bringing a desired good to the market (1). When businesses or citizens are able to make profit off of selling a good they are obviously going to take advantage of this. Some arguments state that prices will continually go up when selling goods to people during a natural disaster, however, due to allocative efficiency consumers are willing to pay more for the product as long as the marginal utility for the good also increases. This also leads into the concept of a free market economy, where the prices of goods and services are completely determined by supply and demand instead of being regulated by government policy. Free markets during natural disasters will highly…
An energy crisis is any great shortfall (or price rise) in the supply of energy resources to an economy. It usually refers to the shortage of oil and additionally to electricity or other natural resources. The crisis often has effects on the rest of the economy, with many recessions being caused by an energy crisis in some form. In particular, the production costs of electricity rise, which raises manufacturing costs. For the consumer, the price of gasoline (petrol) and diesel for cars and other vehicles rises, leading to reduced consumer confidence and spending, higher transportation costs and general price rising.…