Supply and Demand of Gasoline Demand Factors Income Related Products (complements and substitutes) Expectations (about future prices) Consumers in the market Tastes, Fads, Preferences Demand Increase For Gasoline She points out that demand for gasoline rises in the summer, not just because of vacation trips, but because increased daylight encourages more shopping trips as well. March daylight may promote March mall madness. S1 P2 P1 D2 D1 Q1 Q2 This change in preferences (preferring to vacation when it is warm and shop in daylight) leads to an increase in demand. This change will raise the equilibrium price and quantity of gasoline Demand increase in gasoline as the seasons change the warm weather leads us to more traveling China’s demand for Oil and Gas November 9, 2007 Rising Demand for Oil Provokes New Energy Crisis By JAD MOUAWAD Unlike past oil shocks, which were caused by sudden interruptions in exports from the Middle East, this time prices have been rising steadily as demand for gasoline grows in developed countries, as hundreds of millions of Chinese and Indians climb out of poverty and as other developing economies grow at a sizzling pace. Demand from China and India alone is expected to double in the next two decades as their economies continue to expand, with people there buying more cars and moving to cities to seek a way of life long taken for granted in the West. challenge.” India and Economic Growth China’s demand for Oil Demand Increase: As Demand Increases, Price and Quantity Increase as well. AN INCREASE IN CONSUMERS (CHINA & INDIA) HAS CAUSED THE DEMAND FOR GASOLINE TO INCREASE. THIS LEADS TO A HIGHER PRICE FOR GASOLINE AND A GREATER QUANTITY AS WELL S1 P2 Price P1 D2 D1 Q1 Q2 Quantity Hybrids Ford Strives to Meet Hybrid Demand By Sholnn Freeman The popularity of the Ford Escape hybrid has taken the automaker by surprise and left its potential customers howling that the gas-electric sport-utility vehicle is not widely available. Car buyers say they cannot find the vehicles on dealers' lots, in dealer inventory systems online or just about anywhere else they look. Hybrids The Ford Escape SUV Hybrid The Toyota Prius Hybrid Demand Decrease As Hybrids become more popular there will be a decrease in the demand for gasoline. This shift is due to related products: SUBSTITUTE-fuel efficient cars are replacing gas guzzlers. Price S1 P1 P2 D2 Q2 Q1 D1 Quantity Supply Factors S upply changes when: I nput costs change G overnment policies change N umber of sellers change E xpectations of sellers change D isasters strike Supply Decrease Economist: March OPEC supply cut would be 'disruptive, scandalous' With oil treading-water well above the $90 mark, a production cut by the world's largest cartel, OPEC, at its March 5 meeting would be "disruptive and scandalous," according to one economist. This GOVERNMENT Action will cause the price of gasoline to rise, as the supply curve shifts to the left-resulting in a lower quantity sold. OPEC NATIONS: The member countries of the Oil Cartel Supply Decrease: As Supply Decreases, Quantity Decreases, but Price Increases. S2 Price S1 P2 P1 D1 Quantity Q2 Q1 Supply Decrease … Crude oil prices surged by about $2.50 per barrel Friday with the news that a Saudi oil facility was targeted for a suicide bombing attack, even though the attack was unsuccessful. If that jump remains uncorrected, she said, it will translate into about a 5-cent jump in gas prices. This Disaster has led to an decrease in supply and an increase in the price of gasoline. This could also be expectations of future danger. Supply Decrease: As Supply Decreases, Quantity Decreases, but Price Increases. S2 Price S1 P2 P1 D1 Quantity Q2 Q1 US gasoline supply to outpace demand in 2008 - CS The increase in supply is expected to come from refinery expansion projects and repairs, higher ethanol output, and increased import levels from Europe. Meanwhile, U.S. gasoline demand growth is expected to lag below normal at about 1 percent, Credit Suisse said. This information implies a Supply Increase in the gasoline market as Governments (Europe and U.S. projects) boost expansion. Supply Increase Oil Refinery Ethanol can be an input to reduce the use of gasoline leading to a greaher supply Supply Increase: As Supply Increases, Quantity Increases, but Price Falls. S1 Price S2 P1 P2 This may be caused by an improvement in technology or a government subsidy D1 Q1 Q2 Quantity Gas Prices Today Nationwide average at $3.01 currently.