The recent history of gasoline pricing in my area (as of Friday, January 16, 2009), goes as
One Week Ago
One Month Ago
One Year Ago
Unleaded Gasoline Average Prices in Austin, Texas
The price of gasoline at the pump is due to the one of the most fundamental concepts of
economics, the basic principles of supply and demand. The relationship between demand
and supply determines the price of gasoline. Prices are established by supply and
demand. When reduction in supply occurs while demand rises, prices increase quickly.
However, on the flip side of this when supply increases while demand decrease, prices
decrease. It is interesting to see how the results of the consumers reaction to high gas
prices (when the prices where expensive due
to a limited number of suppliers but lots of
demand) has now in essence contributed to the prices decreasing.
Since prices had reached high levels, consumers have attempted to find alternative
measures for transportations need and thus the demand for gasoline has decreased and
caused a decrease in gasoline prices.
Gasoline became less demanded because buyers didn’t have the desire to pay for it. The
desire for gas lessens and this impacts the supply of gasoline. With the producers of
gasoline being burden and having the surplus of gasoline, leaves the suppliers with
limited options, lower the cost of thegasoline to generate some revenue or to not adjust
the price and continue to experience the effects of not having it sell and thus losing
revenues. This is the beauty of the free market system, consumers have the ability to
assist with establishing the price of goods and services,
Other factors that have contributed to the decrease of gasoline are the decrease in the cost
of cruel oil. Since the oil is reined to produce gasoline, suppliers having to pay less for
materials causd a decrease the price.
In conclusion, economist Peter Beutel, the CEO of Cameron Hanover, explained on CNN
that when gasoline prices spiked at more than $4 per gallon, consumption declined by
more than 5 percent. The sum of 5 percent might not seem like much, but it means all the
difference in the price of oil, and therefore, the price of gasoline. But as soon as gasoline
prices plummeted, consumption increased. Furthermore, short-sighted people started
GasBuddy Organization Inc. "Chart: Unleaded Gasoline Average Prices." [Online image] 16 January 2009. <http://www.austingasprices.com/>.