Oil Demand

http://abcnews.go.com/Business/fuel-efficient-cars-steady-oil-demand-rich-countries/story?id=8822971

This article mentions that the demand for oil in developed countries has increase to the maximum point. Many residences have their own vehicle because the standard of living is set quite high. Developed countries such as the United States are maintaining a steady demand of oil, whereas developing countries such as China have an expanding demand for oil. The reason is because the United States have reached its greatest possible amount of vehicle ownership. People assume that there will be a less demand of oil over time. The prices of oil are expensive and it will lead to a decrease in the demand for oil. Now the United States are aiming to achieve the creation of a more fuel efficient vehicle.

This article is directly related to the concept of demand. In this article, there is a steady demand for oil and is assumed to decrease. When the prices of oil rise, the quantity demanded will decrease while the quantity supplied will increase. A factor that will affect the demand would be the substitute products because prices of gasoline may be difficult to afford as the price increases. The demand for electric motored vehicles would increase because electricity is cheaper than gasoline. There would also be an affect on the demand for cars because when gasoline prices increases, the demand for cars would decrease. The preference of gas fueled cars over electric cars also affects the demand. Gas fueled cars can travel for longer distances and that makes it superior to the electric cars.

In our community, we are reliant on fueled vehicles for transportation. Gasoline is such an important factor in our life because cars are efficient and can transport us at a fast pace. The demand for gasoline is inelastic. The demand for gas is high even though the prices are rising. People are still consistently buying gas regardless of its price. Since the demand of gas is so high and there isn’t another efficient source of fuel to use for cars, it would be difficult to decrease the prices of gas. Constructing better fuel efficient cars would be a good idea because that would save some money with less fuel consumption.

Oil Scarcity Leads to Electric Cars

hmhttp://www.examiner.com/x-14333-Green-Transportation-Examiner~y2009m9d4-Oil-scarcity-leads-us-to-electric-cars-which-leads-us-to-Neodymium-scarcity

This article talks about how the shortage of oil leads to the development of electric cars. When there is a low supply of a limited resource, it becomes harder to extract and production would fall. The low supply of oil causes a problem for gas fueled cars and electric powered cars would be a solution for this. Electric cars use rare earth metals to make the electric motor. Neodymium, terbium and dysprosium are key components of an alloy used to make the high-power, lightweight magnets for lightweight powerful electric motors. All non-renewable resources such as oil and even neodymium are limited in supply.

This article presents a perfect example of scarcity. Scarcity is the reason why there is value to goods because there is a limited supply. The shortage of oil, due to the fall of production, means it is increasing scarcity which leads to an increase in price. As a result, consumers will have to sacrifice more in order to purchase oil which means their opportunity cost would increase. In which case, consumers would look for a cheaper alternative such as electric powered cars. Since consumers are the major determinant of resource use and as long as the consumers are willing to pay for the electric cars, the suppliers would increase the production of electric cars to meet the demands of the consumers.

In my opinion, electric cars are only a solution if the prices of oil, which is determined by its scarcity, increase to a point where consumers are unwilling to pay. In other words, the success of electric cars is determined by the price of the oil. However, due to the fact that the resources used to produce the electric car are also scarce, this is only a temporary solution. Another solution is that technology may improve consumption efficiency of the scarce resources so that the supply will not be depleted as quickly.