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 is becoming more expensive, but I still see the demand for it staying the same. Nowadays, everywhere people go is by car because it can get them to the destination in a short period of time. Even if the price of gasoline rises, consumers will continue to purchase it. They might not fill up the tank fully, but they will still buy it. If countries create more fuel efficient cars, then the cars can conserve gasoline instead of filling up the tank weekly. This can save them a lot of money because it can be very expensive with the costly gasoline prices these days.
ReplyDeleteI agree. Gasoline is used by almost everyone. Whether the price stays the same or goes higher, people will still buy gas regardless because it is a necessity. Without it, transportation would be very different. Also many families have multiple cars which have different purposes but require the same fuel, gasoline. With the new electric cars expected to hit the market fairly soon, it will be interesting to see the impact of the price of gasoline then.
ReplyDeleteMichael, I agree with you. A lot of people are still buying gas for their vehicles, even though the prices are rising. Since gas is an inelastic product, people would buy gas as needed, no matter what the price is. I believe if this consumer behavior continues, oil companies would be able to raise prices, and demand would still be very high because many canadians can't live without a car. Many families now have two or three cars because there isn't enough time to share one car. Hopefully, people will try to use alternatives so the gas prices wouldn't rise a lot more. Driving creates green-house gases, so walking, riding a bike, or using public transit will help save the world as well as save money.
ReplyDeleteThis is a very interesting point. The standard of living affects the amount of cars that are purchased, which affects the amount of oil consumed. Even though the world is partially under-developed, the oil supply is depleting quickly. Although, the underdeveloped countries pay a large contribution towards the lag of the total depletion of our oil supply. It is also interesting to know that even though under-developed countries do not use as much oil as developed countries, they still are affected with the high prices.
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ReplyDeleteOil is a significant resource that has versatile usage throughout the world. The fact that you stated, “People assume that there will be a less demand of oil over time,” is completely absurd even though the prices are increasing, because I believe that people will still be willing to pay the price for oil because it is a necessity. For example, those who don’t work near their residence will depend on oil to power their car. Also those who enjoy transportation by car for their luxury compared to public transit are willing to pay for gas regardless of the price. Only in an ideal world would the available oil not being sold in America be given to developing countries to satisfy its high demand in oil. Until then, these developing countries will have to deal with its insufficient oil problem by themselves. Although Americans are trying to create a more fuel efficient vehicle (i.e. hybrids), we have to take note that are these vehicles affordable by the middle class household.
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