Rachael Furman

Business Economics GM545

Summer 2012

furman.rachael@gmail.com

Exercise 1: Number 1 – Everyone’s Gasoline Problem
` Rising gas prices has been a huge concern for most Americans over the last couple of years. It seems as though each weekly stop at the pump costs more and more each time. Most people just pay the price but never stop to think why these gas prices continue to rise. There are seven major factors that directly affect the price of gasoline. These factors are: supply and demand, crude oil, gasoline, natural gas, heating oil, government regulations, and natural disasters. Two of the most important of these factors is supply and demand and crude oil. The demand for gasoline comes from the cars, trucks, SUVs, and most other vehicles on the highway. Many consumers use their vehicles to travel longer and further in the summertime for traveling, vacations, and road trips. “Americans drive nearly 3 trillion miles per year, according to the Motor and Equipment Manufacturer’s Association (Bonsor 1).” The United States uses 20 million barrels of oil products per day, which 178 million gallons of that is gasoline. Price increases typically occur when the world crude-oil market tightens and lowers inventories making the supply less. When the supply is less, it becomes more difficult to fulfill the required demand. Therefore the price rises making the gas more exclusive. Fewer consumers are willing to pay the higher price, therefore consumers tend to find alternatives to filling up at the pump. People ride their bikes, carpool, or take public transportation. Gas prices in New Jersey tend to be lower then most surrounding states such as Pennsylvania and New York. Over the last three weeks gas prices have steadily increased. The reasons for these increases are based on rising crude oil prices.
Exercise 2: Chapter 5 –