Sunday, August 25, 2019

Product Article Example | Topics and Well Written Essays - 750 words

Product - Article Example It is important to know why prices of petroleum products make a random up and down movement in price line. Being a product of global petroleum market, its supply chain participants’ list is complex. Although its supply is not short but demand of gasoline is likely to grow. To fulfill the demand side, its production and imports needs to be increased if the public is to be served with a constant price line. Petroleum companies’ lenient attitude in strengthening the supply line creates temporary shortage of gasoline; it affects the price. Market for petroleum goods reacts to the dynamics of supply/demand. Any supply imbalance created takes some time, so the price of gasoline gets increased for some time only; as soon as supply is replenished, balance in demand and supply pulls down the hike in price. Market mechanism works to provide the speedy and the most effective answer to the supply disturbances (National Petroleum Council, 2004). In the U.S. gasoline prices have seen wider fluctuations. People have spent millions of dollars extra on gasoline during 2004 and 2005. Some areas have been affected sharply than others. In the spring of 2005, gasoline national weekly average prices at the gas stations after including taxes increased $2.28 per gallon. This hike in gasoline prices was steep but temporary and was felt throughout the U.S. It is also observed that sometimes gasoline prices in some particular areas are higher than rest of the market. According to the Federal Trade Commission Report (2005), since the mid nineties, the West Coast consumers, especially the Californians have paid more dollars for gasoline than rest of the U.S. states. Other than the dynamics of demand and supply, federal, state, and local regulations also affect the price of gasoline. Policy makers need to analyze to select the right strategies to counter the hike in gasoline prices. Price hike in gasoline is closely associated with antitrust issues, as analyzed by the

No comments:

Post a Comment