Why You Can't Influence Gas Prices

Topics: Petroleum, Supply and demand, Competition Pages: 1 (373 words) Published: October 31, 2010
Consumers control the marketplace instead of the sellers. Basically, the buyers have more control over the price of goods than sellers do. Gas prices cannot be based on the buyers alone. Constantly, the market finds an equilibrium gas price based on both supply and demand. Consumers can decide not to buy gas from one oil company without affecting or increased the demand of oil of another oil company. Irregular gas’ demand from one oil company to another can decrease prices of bigger companies and will also cause an increase in prices of other oil companies as the demand for their products increases. Economically, the laws of supply and demand and equilibrium pricing can correlate to individual companies, gas stations, and the market as a whole. For that reason, if there is a gas station across the street that is our competition and they reduce their prices because of a decrease in demand, we would not have to decrease our prices. Over the long run, the larger company would liquidate their surplus in oil products because of the jump down in demand in other wholesale crude oil markets. The larger companies that experience a boom in demand would purchase the excess supply and compete with other competitors to set an equilibrium price.

The following paragraph could be added with what you have for the conclusion: In conclusion the price of a good is determined by supply and demand. The only way to lower he price of gasoline is by having an increase add supply or a decrease add demand. When people decide to not buy gasoline from a large company, they only hurt themselves in the short run because they are spending more money when paying for gas with the competitors. When smaller gas companies see that the consumers are not buying from the competitor for whatever reason, they know that they can raised the gas prices and people will continue to buy the gas from them. After all, prices will eventually establish an equilibrium price that is comparable to where...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Factors Influence the Equilibrium Price Essay
  • Essay on Why Do Gas Prices Fluctuate?
  • Gas Prices Essay
  • Essay about Gas Prices
  • Essay about Gas Prices
  • You Can't Take It with You Essay
  • Why Are Cocoa Prices Rising Essay
  • Explain how the price mechanism brings about the equilibrium price and also how and why the government would intervene in the market place....

Become a StudyMode Member

Sign Up - It's Free
Toys Games | Hanasaku Iroha | Retro di un segnalibro