Anthony Ceniccola
Business Economics (GM545)
March, 2012
Cynic710@gmail.com

Exercise 1
Problem 1: Everyone’s Gasoline Problem Fluctuation at the gas pump is universally understood and expected as of late, but the true meaning behind such fluctuation is still confusing. Through research I have concluded a number of factors play a role in determining the gas price and its fluctuation. Of those factors supply and demand plays a huge role. Naturally, demand for fuel will rise as the population continues to grow both nationally and internationally, the equilibrium of fuel as a product shifts as demand outweighs supplies, leading to a price increase. Also understood is the supply aspect of fuel and that factors it faces, such as failure in the distribution networks (Forbes) or lack of supplies. A good example would be hurricane Katrina, and the failure to accept and distribute supplies. When Katrina hit I was living in South Florida attending college, and I recall gasoline station owners turning customers away simply because there was no product to sell. The domino effect from this was very crippling to the core of how our country runs, as supplies from other markets could not be delivered due to empty-tanked trucks, people were not able to get to work or school and public transportation came to a halt. The equilibrium shift from the gas crisis was unique because of its effect on other markets and the monopoly it holds over the population. Sure, there are several different gas companies offering fuel at their stations at different prices, but gas itself is one product, and alternative energy cars are only starting to hit their stride in the world. So with that fluctuation of pricing is not as fragile when considering government control over the product. It’s one thing to have a natural disaster shift equilibrium, but another to