Associated Press, MSNBC, no date pf publication.
In the Midwest, especially, gasoline prices have increased in previous months. However, within the past two weeks gas prices have fallen "a record 10.81 cents." According the Lundberg Survey, the reasons for the fall of the gas prices is due to the lack of demand, which is a result of the resent terrorist attack, scaring travelers from venturing far from home. The consumer's fear of traveling has caused the decrease because without a desire to travel, there is no necessity for gas or crude oil. The cause of this recent decrease can be explained using a supply and demand curve. The graph illustrates the decrease in demand, dropping the prices, causing the demand curve to shift to the left (Figure 1). .
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I believe that the results of the recent drops will cause the demand, as well as the price, for gasoline to increase. Not only because as we progress farther from the date of the attacks people will feel more secure in traveling, causing a need for gas, but also because the lowered price will increase the desire for a cheaper product by the consumer. The prediction is depicted in the following graph of supply and demand curves (figure 2):.
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In juxtaposition to this, I believe it is possible for the predicted increase to be caused by the necessity to make up for the lack of travel, in other words, the fear and lack of travel means that in order to continue with the regular travel consumers are compensating this by creating a greater demand for transportation, i.e. fuel for transportation, as demonstrated in figure 2.
It is true however, that there has been an increase in the supply of gasoline, due to the excessive amounts of availability, which too, creates the result of cheaper prices, mostly because there is "low demand and bulging gasoline inventories.".
