Demand Elasticity of Gasoline
ith gas prices across the country reaching record levels today, understanding the theory of demand elasticity of gasoline has assumed new importance for policymakers and consumers alike. To help understand what motivates consumers to make a purchase decision about a commodity such as gasoline, this paper provides an overview of the economic theory of demand elasticity, empirical data relating to demand elasticity for gasoline, followed by an analysis of the data. A summary of the research is provided in the conclusion.

Economic Theory of Demand Elasticity

Demand elasticity relates to how much consumers are willing to pay for something based on their individual needs and wants on an aggregated basis; economists measure this degree of elasticity along a price elasticity of the demand curve. According to Robert E. Kuenne (1968), "The degree of downward reaction of the amount demanded to a price rise or upward reaction to a…...

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Works Cited

Borenstein, Severin. (1991). "Selling Costs and Switching Costs: Explaining Retail Gasoline

Margins." Canadian Journal of Criminology, 22(3):354.

Borenstein, Severin and Andrea Shepard. (1996). "Dynamic Pricing in Retail Gasoline

Markets." Rand Journal of Economics, 27(3):430.

Under an efficiency standard it is very clear that the NCEP suggestions for CAFe standards are grossly over stated and should not be considered the final result for lowering CO2 emissions.
A more detailed analysis of two specific policies, the cap-trade policy, and CAFe standard increase, shows the inefficiency involved in this scenario. In the cap-trade case, higher energy costs reduce the amount of energy used. The cap-trade model limits the amount of energy that can be used per household and provide both price (permit fee) and non-pricing (standards) policies to lead to reduction of energy usage for businesses on a national level. At the current projections, GDP loss as a result of the cap-trade model is projected to be 0.04% lower than the reference figure. While the CAFe standard case, the loss is.26%, more than four times the loss incurred under the first model.

In the case of the cap-trade…...

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Bibliography

Committee on Effectiveness and Impact of Corporate Average Fuel Economy (Cafe) Standards, "Effectiveness and Impact of Corporate Average Fuel Economy (Cafe) Standards." National Academy Press. Washington, D.C.  http://www.nap.edu/html/cafe/ 

Kleit, Andrew N. "CAFE changes, by the numbers." Regulation, 10/01/2002. P. 32

National Highway Traffic Safety Administration, "Budget in Brief"  http://www.nhtsa.dot.gov/nhtsa/whatis/bb/ 

National Center for Environmental Economics, "Economic Incentives for Pollution Control 6.1.13. Corporate Average Fuel Economy Standards (CAFE).  http://yosemite.epa.gov/

Rising Oil and the U.S. Economy
In May of 2000, Forbes magazine ran an article minimizing the impact that oil prices would have on the U.S. economy. In the article, author Peter Huber writes:

Bill Gates is a very rich man, and that lets Alan Greenspan worry less about oil prices than he used to. Greenspan puts it more broadly, of course: "The economy has lessened its needs and ties to energy." Oil especially. It just doesn't take much of it to make software. (Huber 97)

Just four years later, Huber's article seems less accurate than it might have been viewed at the time it was written and yet, many of the indications presented in the article can be reasonably said to have survived the economic tumult that rising oil prices have caused in the U.S. It is, however, difficult to assess how much of an impact the price of oil is responsible…...

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Works Cited

Cooper, James C. And Madigan, Kathleen "How Costly Oil Will Test the Economy." Business

Week 8 Nov. 2004: 3907

Englund, Michael "Why Oil Didn't Ignite an Economic Inferno." Business Week Online 16 Nov.

2004

" As far as economic conditions are concerned, as part of the company's strategy it is committed to aiding people with the social and economic problems that they face (Environment and Society). This is known as the community investment strategy. This strategy encompasses human rights, education, and enterprise development (Environment and Society).
BP's management is also concerned with decreasing dependence on oil and has created various initiatives to create new sources of energy.

Shell

Shell has also experienced a great deal of profit as a result of oil prices. An article reports that "Excluding a non-operating gain of $113 million, the result was $5.975 billion, ahead of an average forecast of $5.56 billion in a euters poll of seven analysts. "These are good, solid underlying results and better than we have expected," Peter Hutton at van Lanschot Bankiers said. "But it is still not delivering the same amount to investors, compared with BP…...

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References

BP profits rise on high oil. April 25, 2006. Reuters. Retrieved May 23 at http://today.reuters.co.uk/news/newsArticle.aspx?type=businessNews&storyID=2006-04-25T081534Z_01_WLA9431_RTRUKOC_0_UK-ENERGY-BP.xml

Chief Executive's introduction. Official Shell Website. Retrieved May 23 at  http://www.shell.com/home/Framework?siteId=envandsoc-en&FC2=/envandsoc-en/html/iwgen/leftnavs/zzz_lhn3_0_0.html&FC3=/envandsoc-en/html/iwgen/introduction_chief_executive/intro_chief_executive_16032006.html 

Corporate Citizenship. Retrieved May 23 at  http://exxonmobil.com/Corporate/Citizenship/citizenship.asp 

Environment and Society. Official BP Website. Retrieved May 23 at  http://www.bp.com/subsection.do?categoryId=4534&contentId=7014436

Few states taxes increased during the run-up of early 2008.
Refining costs also account for 19% of the price at the pump. Most refining takes place close the market, although the U.S. is served by some refineries in the Caribbean. The greatest amount of U.S. refining capacity is along the Gulf Coast (EIA, 2009). There is no evidence that an increase in refining costs occurred to justify the price increases recorded. However, there was a capacity shock during Hurricane Ike. The impending hurricane forced refineries to cease operations. The threat of supply shortages caused a rebound in prices, which had been declining over the course of the summer prior (Schoen, 2008).

The final variable, marketing and distribution costs, is often cited as a source of gas price spikes. Gasoline companies are handed significant blame, although more often than not they are merely the messenger that the public is shooting. The oil…...

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Works Cited:

Website: Energy Information Administration. (2005). A Primer on Gasoline Prices. Retrieved May 9, 2009 from  http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/primer_on_gasoline_prices/html/petbro.html 

Website: Energy Information Administration. (2009). Refining. Retrieved May 9, 2009 from  http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/oil_market_basics/refining_text.htm 

Kahn, Chris. (2009). Gas Prices on the Rise, Crude Ends Week Strong. Associated Press. Retrieved May 9, 2009 from http://www.google.com/hostednews/ap/article/ALeqM5i5TtajgUpSm7KY5jf-lCJGHBB-tAD98288UG0

No author. (2007). Annual Energy Review 2007. Energy Information Administration. Retrieved May 9, 2009 from  http://www.eia.doe.gov/aer/pdf/aer.pdf

This will require the evaluating organization to determine which competitors are already successfully entrenched in more innovative and 'green' auto designs, which are growing in market share for adopting such innovations and which are shrinking for failing to do so. The power of this knowledge should allow an organization to make constructive decisions about segmenting its own approach to a market which still depends on fossil fuels but which is also showing a will for change
Recommendations

The business imperative is therefore to make a change in practices that prefigures the inevitable tipping point toward the collapse of the petroleum industry. Indeed, "eber tells us that the eventual electrification is necessary for a number of reasons. He says: 'climate change is a fact,' and that: 'peak oil, maximum oil production could come as early as 2020.' it's this, as well as technological advancement and customer acceptance of alternatively powered vehicles that…...

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Works Cited:

Energy Information Administration (EIA). (2007). Country Energy Profiles. U.S. Department of Energy (U.S.DoE, 1). Online at http://tonto.eia.doe.gov/country/index.cfm

Fortune, K. (2009). An Insider's View: Merc's Future Green Technology. Yahoo! Cars. Online at  http://uk.cars.yahoo.com/04082009/36/insider-s-view-merc-s-future-green-technology-0.html 

Gore, a. (2006). An Inconvenient Truth. Paramount Classics.

Online at  http://www.climatecrisis.net/thescience/

The Middle East takes great pride in its oil production, and sometimes dictators overstep boundaries in order to claim that oil for themselves, as Saddam Hussein of Iraq attempted to do to Kuwait in 1991.
Kuwait is a particularly extreme example of cheap oil for all within the borders of Kuwait. This small nation just next to the Arabian Peninsula has massive reserves of oil beneath its sands. Oil merchants could potentially make great profits from selling gasoline at market prices in the Middle East and Kuwait, but the overwhelming attitude of oil is that it should be extremely cheap and plentiful always, so oil merchants do not even attempt to exploit the local population with higher gas prices.

hen Iraq attempted to invade Kuwait, a tiny neighbor by comparison, it was seen as vital to American interests to maintain a strong bond with Kuwait, as Saddam Hussein had been far…...

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When Iraq attempted to invade Kuwait, a tiny neighbor by comparison, it was seen as vital to American interests to maintain a strong bond with Kuwait, as Saddam Hussein had been far more volatile of a partner to the U.S. In the past. That is why the entire world condemned Iraq for its actions, and a large unified army action defeated Saddam Hussein's massive tank columns in just a few weeks. Kuwait's pride in its oil was maintained, and they made long lasting and secure relations with the United States for protecting its borders. In the year 2011, Kuwait is resting on solid ground in the region, and is a wealthy and prosperous nation. There is simply no need to charge market prices for gasoline as the sacred oil which has come to define Kuwait has been core to the nations success, and has been so plentiful to the populace for so long that it would be difficult to even change the prices of gasoline for locals.

The Arab Spring and Middle East Unrest. (2011). Brookings Institution. Retrieved October 1, .

Global prices around the world. (2011). CNN. Retrieved October 1, .

In only six of the 16 months studied did petroleum prices move in the same direction as troop casualties, a month after those casualties occurred (See Table 1 and Graph 1). hen we consider the three months with the largest increases (145.2% in April 2006; 60% in December 2006; and 51.2% in August 2006), only once (May 2006) did the following month post increased refined petroleum prices. If we consider all months with at least 20% movement in troop casualties, in only four of the 10 months did refined petroleum prices move in the same direction the following month. Isolating months with at least 30% movement in troop casualties shows that in only one case of five did refined petroleum prices increase the following month. In short, the link gets worse as the percentage increase or decrease in casualties moves significantly.
By analyzing a two-month lag, we are left with…...

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Works Cited

Newspapers

1. Hall, K. (2006). "What will war cost? Studies weigh oil prices, lost productivity, more." The Seattle Times, Jan. 14. Retrieved Nov. 20, 2007 at  http://seattletimes.nwsource.com/html/nationworld/2002739307_warcosts14.html .

2. Kopytoff, V. (2002). "Iraq war could hit at pump." San Francisco Chronicle, Nov. 20. Retrieved Nov. 22, 2007 at  http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2002/11/20/BU4619.DTL .

Government sources and statistics

Rising Gas Prices
There are many different reasons why gas prices are rising so rapidly and it often depends on who one asks this particular question of. Many economic analysts share different views about the rise of gas prices and the media has also spent a great deal of time covering this issue. There is something about rising gas prices on the news, in the papers, and on the Internet almost constantly and it is difficult for Americans to avoid the issue or stop being reminded of it when they read or watch television, or when they get on their computers to look at the news of the day. It is also difficult for Americans to forget about this issue every time they drive their cars or pull up to the gas station because every mile they drive reminds them that they are spending more money than they used to be…...

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Works Cited

Burrows, Dan. 2004. Rising gas prices may hurt moderate, discount retailers. Home Furnishing Network.

DeWeese, Adrianne. 2005. Supply, demand control gas prices. University Wire.

Joyner, Tammy. 2005. Fill tank, empty wallet Commuters feel the pinch of rising gas prices. The Atlanta Journal and Constitution

Kirms, Michelle. 2005. U. Rhode Island students talk back about rising gas prices. University Wire.

So far, there are few signs of them reinvesting these profits in infrastructure that would help alleviate the problem, such as more refineries in the U.S. that could create more fuels and help bring prices down. The organizational leadership at this level seems more concerned with continued profits rather than working together with the government and others to help maintain the economy and avoid a recession.
This seems shortsighted, because if a full recession does hit the U.S., consumers will be cutting back even more, and many will have to curtail their driving and travel, especially if they lose their jobs. Thus, this leadership plan is not effective for the long-term. Oil companies may retain record profits now, but in the future, that has to change, and it seems they may not be flexible enough to manage that change when it occurs.

eferences

Crutsinger, M. (12 May 2007). Gas prices squeeze consumer.…...

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References

Crutsinger, M. (12 May 2007). Gas prices squeeze consumer. Retrieved from the SuburbanChicagoNews.com Web site:   May 2007.http://www.suburbanchicagonews.com/beaconnews/business/382294,3_3_EL12_ECONOMY_S1.article21 

The political situation in the Middle East is extremely volatile. The political situation in the Middle East can have a dramatic impact on oil supplies. However, threats to the oil supply are beginning to emerge outside of the region as well. For instance, there are political situation beginning to arise in Russia, Venezuela, and Nigeria (Federal Reserve, 2004). Political instability can disrupt the supply of oil from a particular region.
eather can also take a toll on the production and distribution of oil and oil products. For instance, hurricane Katrina disrupted oil production in the Gulf of Mexico. This caused a temporary shortage until the services could be restored. There are other external factors that can effect oil prices that are beyond the control of the companies.

Oil futures represent clamed to oil to be delivered at a specified price and at a specified date and location. If the price of…...

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Works Cited

Federal Reserve. (2004). Oil and the Economy. Remarks by Governor Ben S. Bernanke at the Distinguished Lecture Series, Darton College, Albany, Georgia. October 21, 2004. Retrieved July 26, 2007 at  http://www.federalreserve.gov/boardDocs/speeches/2004/20041021/default.htm 

Harrison, M. (2006). BP pins oil price rise on speculators. April 26, 2006. The London

Independent. Retrieved July 27, 2007 at  http://findarticles.com/p/articles/mi_qn4158/is_20060426/ai_n16230189 .

Kaufman, R., Dees, S., Karadeloglou, P., and Sanches, M. (2007).

The former might be, 'What specific...' [while] Less structure might be exemplified by: "Please respond to the following in your own words: I....'" (Dereshiwsky, 1999) in addition:
adding some open-ended items such as these to a more traditionally scaled quantifiable survey, such as one with Likert-scaled attitudinal items, and/or "check/off" questions on demographic background variables, is a good way to make the survey "multimethod" in nature. This is because you'd be using that "single" data collection vehicle (survey instrument) to collect your data (responses) in more than one form: quantitative and qualitative! You could ask the same general questions in both forms and then compare the two alternative forms of responses to see if they 'converged,' or agreed, regarding the phenomenon that you are trying to measure via the survey (e.g., attitudes towards school climate). If they do, you can have greater assurance that "there's something real being captured/measured" regarding…...

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References

 http://www.questia.com/PM.qst?a=o&d=5020524989 

Area Sales of Luxury SUVs in High Gear; Gas Prices Don't Slow Down Affluent Buyers. (2007, April 28). The Washington Times, p. C10. Retrieved April 24, 2008, from Questia database:

This keeps prices all for all users of oil high at present, given the overall escalation of users in total and insulates the price of gas and oil from subtle increases and decreases upon the part of individual suppliers. (Halcomb, 2005)
However, other possible causes may be simple hysteria and gouging. Historically, even when there has been a wholesale price of gas of $1.45 a gallon, gas stations have been able to make a profit by using the media frenzy to gouge customers, sell it for as much as $2.15.

A third factor may be simple unwillingness upon the part of customers in the United States, in the developing world, and in other nations that depend on crude to limit their use of oil, regardless of gasoline prices. "The people who are honest are going to pay for their gas no matter what the price is," said one gas station owner.…...

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Works Cited

Halcomb, Ron. (2005) "Gas Prices to Remain High." Retrieved from Auto Blog on 23 Jul 2005 at  http://www.autoblog.com/entry/1234000953044926/ 

Lemaster, Jeff. (6 Apr 2005) " Filling the Tank Takes More from Traveler's Wallets." The Jacksonville Patriot. Retrieved from newspaper website on 23 Jul 2005 at http://www.jacksonvillepatriot.com/Pages/04-06-05/Filling%20the%20tank%20takes%20more%20from.htm

Unleaded gasoline: Yes

pple Computer: Definitely.

Technological has affected quality of these products?

Hershey's Milk Chocolate Bar: Maybe. Upgrades in equipment that contribute to saving time, may potentially adversely affect quality, as with time savings, company may allocate increased responsibilities to employees.

Pepsi: $.99 for a 2 liter bottle: Maybe. Same reasons given for Hershey's Chocolate Bar.

McDonald's hamburger: Maybe. Same reasons given for Hershey's Chocolate Bar and Pepsi.

Unleaded gasoline: Yes.

Improve techniques, including robotics in refining oil contributes to improving the quality of the tickets.

pple Computer: Definitely. Today's computers have greatly improved to two technological advances fracturing them.

Based on what has happened to the purchasing power of people earning the minimum wage?

Hershey Bar: 1.45 oz - 40 cents; 1.65 oz cents/75 cent = 88% increase.

Pepsi: $.89 for a 2 liter bottle (historic food prices) = 11% increase.

McDonald's hamburger: 43 cents (historic food prices) = 130% increase.

Unleaded gasoline averaged 93 cents per gallon/$2.75 = 296% increase.

Mac…...

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A www.questiaschool.com/PM.qst?a=o&d=5001132553

Siddiqi, Moin a. "Oil Prices Hit New Highs as Winter Demand Bites." The Middle East Jan. 2000: 29. Questia. 3 Oct. 2007  http://www.questia.com/PM.qst?a=o&d=5001132553 .

Students Buy Texts Online to Save Money; Campus Bookstores' Prices Tripled since 1986." The Washington Times 12 Aug. 2006: A01. Questia. 3 Oct. 2007  http://www.questia.com/PM.qst?a=o&d=5016084048 .

Why Gas Vehicles are Better than Electric VehiclesElectric vehicles (EVs) are touted as being the best option for reducing carbon emissions and saving the planet with regards to daily transportation. Yet when one looks at it, one can see that gas vehicles are actually better for the planet in many ways and do not require a total overhaul of the national infrastructure. There are other reasons EVs are problematic as well: for one thing, drivers of EVs have to deal with range anxietyi.e., not being able to go as far as they may like without having to stop somewhere and recharge for a long amount of time. Another problem with EVs is that if everyone were to switch to them, there is simply not enough resources in the world to cope with the demand. This essay will argue and explain, therefore, why gas vehicles are better than electric vehicles in…...

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ReferencesMcKinsey. (2022). What will a green global economy cost? Our experts on the numbers—and what’s at stake. Retrieved from   J. (2021). Not So “Green” Technology: The Complicated Legacy of Rare Earth Mining. Retrieved from  https://hir.harvard.edu/not-so-green-technology-the-complicated-legacy-of-rare-earth-mining/ UN. (2006). Rearing cattle produces more greenhouse gases than driving cars, UN report warns. Retrieved from  https://news.un.org/en/story/2006/11/201222-rearing-cattle-produces-more-greenhouse-gases-driving-cars-un-report-warnshttps://www.mckinsey.com/about-us/new-at-mckinsey-blog/how-much-will-a-green-global-economy-cost-our-experts-explain Nayar,

Potential Game-Changing Factors in the 2024 Election

The 2024 presidential election is shaping up to be a highly consequential one, with a number of potential game-changing factors that could impact the outcome. Here are some of the most significant:

1. The Economy

As with most presidential elections, the state of the economy will likely be a major factor in 2024. If the economy is strong, the incumbent party will have a significant advantage. However, if the economy is weak, voters may be more likely to support a challenger who promises change.

2. Inflation

Inflation has been a major concern for voters in recent months, and....