Essay, Research Paper

Supply and Demand in the Gasoline Market

The substance known, as gasolene is a mixture of lighter liquid hydrocarbons

used chiefly as a fuel for internal-combustion engines. It is produced by the

fractional distillment of crude oil ; by condensation or surface assimilation from natural

gas ; by thermal or catalytic decomposition of crude oil or its fractions ; by the

hydrogenation of manufacturer gas or coal ; or by the polymerisation of hydrocarbons

of lower molecular weight. Gasoline produced by the direct distillment of petroleum

crude oil is known as straight-run gasolene. This is the type of gasolene, which

we use in our cars. It is this which makes gasolene a merchandise that is

indispensable and besides makes it extremely demandable from the driving public. Thus

the monetary value of gasolene can besides hold a direct affect on what types of autos people

will purchase.

One of the jobs with gasolene is that it is, for now, the chief fuel for

cars and because of that it has become a necessity for most of the many

Americans who own autos and have no pick but to drive to acquire to work, as good

as in many other parts of the universe. It is this changeless demand for gasolene to

acquire us around which makes the demand portion of it really high. On the supply side is

where OPEC comes in, because they are the chief providers for the gasolene for

the universe at big. The Organization of Petroleum Producing Countries ( OPEC ) is

a lasting, intergovernmental organisation, created at the Baghdad Conference

of September 10-14, 1960, by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. The

five Establishing Members were subsequently joined by eight other Members: Qatar ( 1961 ) ;

Indonesia ( 1962 ) ; Socialist Peoples Libyan Arab Jamahiriya ( 1962 ) ; United Arab

Emirates ( 1967 ) ; Algeria ( 1969 ) ; Nigeria ( 1971 ) ; Ecuador ( 1973-1992 ) and Gabon

( 1975-1994 ) . OPEC & # 8217 ; s aim is to co-ordinate and unify crude oil policies

among it? s Member Countries, in order to procure just and stable monetary values for the

crude oil manufacturers ; an efficient, economic and regular supply of crude oil to

devouring states ; and a just return on capital to those puting in the

industry ( O

PEC Web site ) . OPEC? s determinations have a direct consequence on the monetary value

we pay for gas, both here in America and around the universe. If they decide that

they want to raise the monetary value of crude oil to $ 30 per barrel, so the monetary value per

gallon at the gas station will travel up consequently. Likewise, if OPEC decides to

lower the monetary value per barrel of gasolene, so OPEC? s determination would hold a

direct consequence on the market monetary value of the gas at the gas station.

The supply-demand issues in the domestic gasolene market affect all different

parts of the economic system. For illustration, when the monetary value for gas was highly low

about a twelvemonth or so ago, people started to buy more autos and many of the

vehicles purchased were Sport Utility Vehicles ( SUV? s ) . These vehicles have

larger engines and tend to devour much more gasolene than the smaller, more

fuel-efficient autos. ( I know this to be true, because during that clip I

purchased a Jeep Wrangler, which holds and uses more gas than the smaller auto

that I used to have. ) Now the monetary value per gallon is at least 60 cents higher so

it was a twelvemonth ago, which, if you do the Numberss as to how much gas people use,

makes it an unbelievable addition. Since the usage of gasolene is an absolute

necessity if you own a auto, so you have no pick but to pay the higher monetary value,

since at this point in clip alternate fueled vehicles aren? T that cost


In this paper I have tried to explicate how the supply and demand of gasolene

and its usage in cars can impact the economic system. In decision, until such

clip that gasolene is no longer needed to run cars at that place will be a

changeless demand for the merchandise, and at that place will ever be organisations such as

OPEC around to provide it.

Brue, Stanley L. and McConnell, Campbell R. . Economicss: Principles,

Problems, and Policies. Fourteenth Edition. McGraw-Hill Irwin

Gasoline, ” Microsoft? Encarta? Online Encyclopedia 2000

hypertext transfer protocol: // ? 1997-2000 Microsoft Corporation. All rights


The Organization of Petroleum Producing Countries Web Site. hypertext transfer protocol: //

2000 OPEC. All rights reserved.

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