...Why Gas Prices are higher in California than in other Parts of US English 123 James L Hicks Embry Riddle Aeronautical University Abstract The rising gasoline and oil prices have become a global concern since petroleum has many uses around the world and yet its prices have continued rising for the last sixty years. This paper sought to find out why gas prices are higher in California than in other parts of America. The literature reviewed showed that West gasoline market dominated by California is defined by tight balance between supply and demand. Other factors found to be contributing the escalating gas price in California include isolation of the state from other refining centers, market conditions including international demand, Wall Street speculation, poor policies leading to uncontrolled oil cartels, decline of oil production during technical failure, political interferences, and increasing prices of crude oil due to demand forces. Despite there being no quick solution to the challenge, temporary measures such as efficient use of the available resource while looking for alternative cheaper source of energy could alleviate the challenge. Why Gas Prices are Higher in California than in Other Parts of US The Rising gasoline and oil prices have today become a world concern (Garrington, 2012). More concerns are raised considering that petroleum is an important product whose price continues escalating for the last sixty...
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...Gas Prices and the Economy The marketplace of supply and demand determines the price of fuel. If demand grows or if supply decreases, there will be an increase in pricing. On the flip side, if demand declines or if there is a surge in supply in the market, there will be a decrease in pricing. If a retailer in the market prices its gas too high without regard to competitors’ pricing, consumers will take their business to the competitor with lower prices. If the retailer loses enough business due to higher pricing, they will lower the prices to be more competitive in order to retain customers. Retailer competition affects gas pricing which can be seen by price differences on stretches of highway with multiple gas retailers. More choices generally mean more competition for the retailers. Even though many retailers carry the gasoline of major oil companies, they are independent dealers of the product and can set prices as they wish. The cost of foreign trade is contributes to the rising cost; however, many other factors contribute to the pricing of gasoline which drastically affects buyers and sellers in the marketplace. According to the Chevron Corporation, like agricultural products, such as wheat and corn, and precious metals, such as silver and gold, crude oil is traded on the world market. Recently, crude oil prices have risen dramatically, driven by rising global demand and political instability in several oil producing countries (“The Price of Fuel…”). Since crude...
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...Article Analysis According to an article from the Inter Press Service, gasoline consumption trends have been declining (Larson, 2013). The declined gasoline consumption has an effect on the utility that is derived from the product. There are different reasons for the decrease that include individuals using different means of transportation, use of other fuels, and decreased sales. Although the price of gasoline has risen, and is still rising, the product is still to considerably inelastic. The decline in gasoline consumption has an effect on the utility of the product including the decline of usefulness of the product among consumers, but still needing the product for exports in the United States. Although the product is not as useful for consumers, it is still a need amongst transportation. Many individuals need the gasoline as a way of transportation to work, school, doctor’s appointments etc. Aside from consumers, the product is a need for exports in the United States economy. There have been occurrences that have changed the demand of gasoline among consumers although the supply remained the same. Occurrences that have changed the demand of the product include the decline in car fleet, less driving among individuals, more fuel-efficient cars, the decline in registered vehicles, decline in new car sales, and the number of Americans living in urban areas (Larson, 2013). With less car fleets, there is less fuel to purchase for company transportation, and with more cars...
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...bushel of salt a. What is the relative price of butter in terms of wool? 1 pound of butter exchanged for 2 yards of cloth and 4 yards of cloth exchanged for 1 pound of wool. Hence 1 pound of butter exchanged for 2 yards of cloth and 2 yards of cloth exchanged for 1/2 pound of wool. So the relative price of butter in terms of wool was 1/2 pound of wool per pound of butter. b. If the money price of bacon was 20¢ a pound, what do you predict was the money price of butter? 1 pound of bacon exchanged for 1 yard of cloth and 2 yards of cloth exchanged for 1 pound of butter. Hence it took 2 pounds of bacon to exchange for 1 pound of butter. As a result, if the money price of a pound of bacon was 20¢ the money price of 1 pound of butter was 40¢. c. If the money price of bacon was 20¢ a pound and the money price of salt was $2.00 a bushel, do you think anyone would accept Mr. Gregg’s offer of cloth for salt? If the money price of bacon is 20¢ a pound, Mr. Gregg’s offer to exchange 1 pound of bacon for 1 yard of cloth means that anyone could obtain 1 yard of cloth for a money price of 20¢. Mr. Gregg’s further offer to exchange 8 yards of cloth for 1 bushel of salt means that anyone could acquire 1 bushel of salt for $1.60, the price of 8 yards of cloth. If the money price of salt is $2.00 a bushel, many people would accept Mr. Gregg’s offer of cloth for salt because it enables them to obtain salt at a money price of only $1.60 a bushel. 2. The price of food increased during the past...
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...Week 1 Eco 365 Article Analysis The name of the article on this paper is OP-ED: Falling Gasoline Use Means U.S. Can Just Say No to New Pipelines and Food-to-Fuel. Through this paper, we have to analyze the basis for the trends in consumption patterns. Consider the utility derived from a product or service mentioned in the article. Describe what has occurred to change the demand for the product or service and its market and equilibrium prices. Describe what has occurred to change the supply of the product or service and its market and equilibrium prices. In your opinion, is demand for this product or service price elastic or inelastic? What does this imply about how consumers respond to changes in the price of this product or service? According to an article from the Inter Press Service, gasoline consumption trends have been declining (Larson, 2013). The declined gasoline consumption has an effect on the utility that is derived from the product. There are different reasons for the decrease that include individuals using different means of transportation, use of other fuels, and decreased sales. Although the price of gasoline has risen, and is still rising, the product is still to considerably inelastic. The inelastic price on gasoline affect the economy in all ways. The decline in gasoline consumption has an effect on the utility of the product including the decline of usefulness of the product among consumers, but still needing the product for exports in the United States...
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...The gasoline consumption patterns have been changing during the last several years. The consumption of gasoline in the United States declined 6 percent from 2007 through 2011 (Mufson, 2012). The shift has occurred because of more fuel-efficient cars, hybrid vehicles, and the increase in the use of bio-fuels. An increase in carpooling and people using mass transit contributes to a reduction in miles driven on an annual basis. People are also more conscious of the environment and global warming, which has caused them to choose fuel-efficient vehicles that have less of an environmental impact. The Obama administration has imposed higher fuel efficiency standards that will decrease consumption even further in the future. The changing consumption pattern studies falls under microeconomics. Microeconomics is a social science that deals with the scarcity of resources by examining how supply and demand affects who gets what and at what price. In a free market economy, such as ours, the forces of supply and demand are expected to act freely, such as the equilibrium price is determined by the intersection of the supply and demand curve. Various participants in the markets do interfere with free markets abilities to operate without interference, such as the government and other various parties, which causes prices to become distorted. It is microeconomics that studies the reasons for these distortions and other effects. The changing consumption patterns of consumers of gasoline, affects...
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...the concepts of price elasticity of demand and elasticity of supply to explore and explain the large fluctuations in the retail price of gasoline over the last 3 years. Use price elasticity concepts to explore the accompanying closure of many gasoline retailers. Also, discuss the impact of cross-elasticity of demand. According to various literatures petroleum is the single largest source of energy used in the United States. It is said that the USA uses two times more petroleum than either coal or natural gas and four times more than nuclear power or renewable energy sources. However, before petroleum can be used it is sent to a refinery where it is physically, thermally, and chemically separated into fractions and then converted into finished products such as the gasoline that is purchases at the pumps. Fluctuations in the average gasoline prices has been caused for concerns, this paper will attempt to look at this through the economic concepts of price elasticity of demand and supply to explain the fluctuation in gasoline retail prices in the USA over the past three years. Price elasticity of demand measures the degree to which unit sales of a product or service are affected by change in price. The demand for a product is said to be in-elastic if a change in price has little effect on the number of units sold. On the other hand demand is said to be elastic if a small change in price has a substantial effect on the number of unit sold. The price elasticity of supply...
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...Should the Gasoline Tax be Raised? 1. Some people believe that reducing dependency on foreign oil, help the environment, decrease the government deficit and all those things can happen if the federal government increases the gasoline tax. But the proposal is not supported by everyone. At the mention of a tax increase, the general public revolts. Many people do not like to pay taxes, so any suggestions for a tax increase are strongly opposed. The federal gasoline tax topic is actual in the United States today. With the growing concern about global warming, an increased tax could help by reducing pollution and reduce our dependence on oil and to finance alternatives. An increased tax could also make the United States more energy independent in the long run, but American drivers would be hurt by a higher gasoline tax in the short run. The purpose of this issue paper is to analyze whether the federal gasoline tax should be raised. 2. First at all lets go through some history. The first federal gasoline tax was adopted in 1932 at a level of one cent per gallon. The tax has increased in small amounts over the past 75 years. In 1951, government raised the tax to 2 cents per gallon to raise additional funds for the Korean War. The federal gasoline tax doubled in 1959 to 4 cents per gallon to assist in funding the construction of the new interstate highway system in the United States (Williams, 2005, para. 2). The next increase was in 1981 to 9 cents per gallon...
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...paper is analyzing the business idea of cousin Edgar to invest in four gas stations in U.S. After conducting researches and analyzing information, there are factors that Cousin Edgar might need to consider before the investment and start up the business. Firstly, the country’s economy health needs to be examined, whether the microeconomic factors, such as the level of demand in gasoline, monthly and a year and the factors that influencing supply of gasoline. Subsequently, macroeconomic factors determine the business idea in producing high profit, and also determining the business span in the short run or even in the long run. Macroeconomic analyzes in oil price According to The World Bank (2014) the total macroeconomic impact of the U.S. oil and natural gas industry is significant. Moreover, the industry was directly and indirectly responsible for over $1 trillion of value- added, or 7.7% of Gross Domestic Product (GDP). Essentially the estimation that the oil and natural gas industry’s total impact on labor income in 2009 was $534 billion (including benefits), which flow to 9.2 million Americans in jobs directly or indirectly in the industry or in jobs supported by those in the industry. In 2007, it is estimated that the industry directly and indirectly contributed approximately $280 billion of revenue to federal, state and local governments. The industry’s impact goes beyond the operations of the companies actively engaged in exploration and production (upstream), and...
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...Few studies have estimated gasoline demand in Canada. Most of these studies have either failed to recognise ali the ways in which consumers can react to gasoline priče changes ог have implemented рге-1973 data which did not provide good estimates of priče elasticities (Dewees et al, 1975; Dahl ,1978; Shalaby and Waghmare, 1980). Some models attempt to estimate the components of gasoline demand using aggre-gated data (Gallini 1983; Dahl 1982). The problem with these models is that they do not identify the relationship between the household decisions on vehicle holdings and on usage. These two decisions are likely to be dependent; the use of a vehicle depends on its type and the type of vehicle chosen depends on its expected use. Since these decisions are made within the household, household data should be used for estimating the various components of gasoline demand. This paper provides an estimate of household gasoline demand in Canada by applying a detailed model to pooled time-series (1969-1988) and cross-sectional provincial data. The model recognises three major behavioural changes that households can make in response to gasoline priče changes: drive fewer miles, purchase fewer cars, and buy more fuel-efficient vehicles. In the model, fuel есопоту is treated in considerable detail. The two components of the fuel есопоту of new cars sold—the technical fuel efficiency of various classes of cars and the distribution of new car sales according to their interior volume...
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...Ethanol: Is It Really the Best Option Ethanol based gasoline vehicles are becoming more and more popular, but is ethanol gasoline better than regular petroleum gasoline? Ethanol, also known as ethyl alcohol, can be an effective motor fuel, and most of the gasoline in the US contains some ethanol (Ethanol As a Transportation Fuel). Many people everywhere are praising ethanol gasoline because it can reduce pollution, and increase engine performance. There are some facts that are not being recognized, and these facts should be brought to light. The price of corn and food products made from corn will increase from the higher demand of corn and vehicles have to use one-third more ethanol than regular gas. Ethanol gas in the end will end up costing more than petroleum gas being used now. Ethanol gas as an alternative to gas will mean that the demand for corn will become greater and greater. The use of ethanol in motor fuel has increased for years an average of twenty-five percent per year (Ethanol Cost And Environmental Factors). This year America will use 5 billion bushels of corn which will produce about 14 billion gallons of ethanol (Helman). So will farmers be able to grow the amount of corn needed for the production of ethanol gasoline and food demand? The increase in corn crops in the Midwest has added to size of the dead zone in the Gulf Coast (Miller). What if the country was to experience another serious drought, or major flood? A different method of creating ethanol would...
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...Politicians’ claims aside, the politics of energy policy are rarely about what is best “for the country.” When government sets energy policy, some people gain, and others may lose. The politics of energy policy, then, are not simply, or even generally, about how to make the nation as a whole better off. Rather, the politics of energy policy are very much about interested political groups struggling against one another. This type of “special interest” politics is nothing new, and not unique to energy policy. Nevertheless, it is widely held among average Americans that the political activities of special interest politics are often bad for the nation as a whole. Because public information is a democracy’s best weapon against harmful special-interest politics, in this chapter we hope to accomplish three goals: 1) to present an outline of the “nuts and bolts” of U.S. ethanol policy; 2) to use economic analysis to examine the effects of ethanol policy, presenting arguments to cut through much of the political rhetoric about which groups win and which lose from it; and 3) to discuss the politics that drive ethanol policy for clearer view of just why we see the policies implemented that we do. The Issue at Hand: Who Really Benefits from and Who Really Pays for US Ethanol Policy? Groups of citizens are interested in ethanol policy because their well-beings are affected by it, either positively...
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...Everyone’s Gasoline Problem The fluctuation of gas prices occurs because of a number of factors; the price of crude oil, the price of manufacturing, the price of corn is all tied to the price of oil and the price we see at the pump for gas. In 2011, the United States consumed about 134 billion gallons1 (or 3.19 billion barrels2) of gasoline, a daily average of about 367.08 million gallons (8.74 million barrels). This was about 6% less than the record high of about 142.38 billion gallons (or 3.39 billion barrels) consumed in 2007,according to the Department of Energy ("How much gasoline," 2012). Of that, almost half is used for motor gasoline. The remaining is used for distillate fuel oil, jet fuel, residual fuel and other oils. Each barrel of oil contains 42 gallons (159 L), which yields 19 to 20 gallons (75 L) of gasoline. ("How much gasoline," 2012). So, in the United States, something like 178 million gallons of gasoline is consumed every day. The fluctuations of gasoline prices are a classic economic example of supply and demand in the market. If the demand for corn or oil increases or if a decrease in supply occurs, this then causes an increase in gasoline prices. On the other hand, if demand for corn or oil decreases there will be an oversupply of products and the prices will decrease. The seasons and US holidays may also have an impact on the price of gasoline at the pump. Americans travel more during the summer and over the holidays, and the price of fuel increases...
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...Relationship Between Gasoline Sales and Vehicles Miles of Travel Rufat Rahmanov Quantitative Research Methods (EC 315) Professor Kathleen Vinlove October 7, 2008 Park University Purpose Statement and Model I have chosen this particular model for research paper because I am a business major. At the present time world economy faces the situation of the high petroleum prices. Thus, the understanding of what factors and how they affect on the increase or decrease of the sales of the gasoline is considered to be very relevant. The dependent variable “Annual prime supplier sales volumes of regular gasoline per capita” is determined by the following independent variables “Annual vehicle miles of travel per capita”, “Personal income per capita” and “Retail price of regular gasoline”. The model is: Yi=β0+ β1X1i+ β2X2i+β3X3i+ ei Definition of Variables and Data Description Y: As it was already stated, my dependent variable is annual prime supplier sales volumes of regular gasoline per capita. Prime supplier is a firm that produces, imports, or transports selected petroleum products across State boundaries and local marketing areas, and sells the product to local distributors, local retailers, or end users. Regular Gasoline is gasoline having an antiknock index (average of the research octane rating and the motor octane number) greater than or equal to 85 and less than 88. Per capita sales data was obtained by dividing the total sales of regular gasoline by total population...
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...AN ALTERNATIVE TO FOREIGN OIL An Issue Paper Presented to Professor Sheila Christensen Professor of Marketing Utah Valley University For Management 2200 By Greg Gossard July 30, 2012 Executive Summary Over the past few decades, in the United States, oil is the primary fuel consumed by most vehicles on our roads and in our air space today. It is estimated that two-thirds of the oil used is due to the transportation sector. This report will examine the pros and cons of the need for alternate solutions to the ever increasing reliance the United States has on foreign oil. There are practical alternatives and solutions that the United States could implement in the short run, and especially in the long run as well. The idea of domestic drilling, along with natural gas, and plug-in hybrids are definitely worthwhile options to look at for an alternate solution to the dilemma of oil consumption. While some may argue that these other sources are not consistent enough or wouldn’t be efficient resources for alternative energy, there is enough evidence supporting claims to the contrary In financing research projects exploring alternative energy, the U.S. would easily be able to use all of those resources of energy to remove our dependence on foreign oil consumption. On average, the U.S. spends about one billion dollars per day on foreign oil. That adds up to be thirty billion on average per month, and over three hundred and sixty billion annually. This is a gross and unnecessary...
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