Gasoline is very important in the world economy. The price is subject to forces of demand and supply. The world has witnessed a rise in demand of gasoline in the past decade owing to the improvement of the economy of emerging nations such as India and China. Overpopulation is also driving higher demand owing to rising economic activities such as transportation. Such activities increase the consumption of gasoline. On the other hand, the supply of gasoline is affected by various factors such as political issues, environmental factors and oil reserves. For instance, a war in oil producing countries such as Iraq significantly reduces the supplies in the global market. Moreover, natural calamities such as hurricanes have the capacity to destroy the supply facilities. Changes in the demand and supply of gasoline affect the equilibrium price of this commodity. The prices of oil are anticipated to change in the future due to issues such as regulatory mechanisms and oil refineries shut down.
Keywords: Gasoline, demand, supply, equilibrium price
The Market for Gasoline
Gasoline is very important type of fuel in the modern society because it is used to run various kinds of engines. It also plays a significant part in the growth of both the developed and developing nations. More than 84 million barrels of gasoline has been used up each day across the globe since 2009. Due to the importance of gasoline, changes in its prices can generate a significant impact on the global economy (Houser & Mohan, 2013). The demand and supply principle is important in understanding the gasoline market. Additionally, various factors influence the demand and supply of this commodity in the international market.