Rising Price of Gasoline Gas Term Paper

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Total Length: 1680 words ( 6 double-spaced pages)

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While domestic demand has decreased in recent months in response to the price increases, demand in international markets, particularly in China and India, has continued to grow. The nature of demand in those markets means that demand there continues to be inelastic. With expanding economies that are increasing the wealth of the populace en mass, those countries are essentially creating millions of middle class consumers with middle class needs where they didn't exist before. There is no elasticity to the creation of new consumers, as few would reject the opportunity to join the middle class simply because gas prices are on the rise. Twenty years ago, global demand reflected almost entirely demand in the West, which was inelastic.

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Now that demand in the West is becoming elastic, some clearly feel that this should be the case for global demand as well. But demand in emerging markets is still inelastic, which means that the case of supply and demand driving the current rise in oil prices can be made. To the extent of at 65% rise in nine months? Perhaps not, but even if there is a market failure on account of speculators, it will correct itself eventually and we will still have inflated fuel prices and rising demand to contend with, bringing with it a whole host of supply and demand shifts across our economy......

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"Rising Price Of Gasoline Gas" (2008, June 18) Retrieved May 18, 2024, from
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