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How Do Gas Prices Affect The Consumption Of Gas

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The thought of rising gas prices is something a person thinks about when summer arrives and it is time to put gas in their vehicle. With more people out traveling in the summer, whether it is for work or for family vacations, consumers have a tendency of paying close attention to the rise in gas prices. Maybe consumers should take a look into what factors contribute to price of gas going up.
Gas prices are solely based on supply and demand. Gas prices are largely affected by the price of crude oil, also prices in gas fluctuate when crude oil is stable. If a problem occurs at a refinery, this can cause the price of gas to change. On the supply side, a major impact of the increase in gas price is storage of natural gas. The storage of gas helps …show more content…

The number of consumers who are using gas for transportation, and the hot summer temperature, “warmer temperatures increase the demand for air conditioning, which generally increases the power sector’s demand for natural gas”(EIA, 2017). In the summer some fuel retailers will increase the prices at there gas stations to meet the demand for gas by travelers. Also, in the summer there are natural disasters that happen, such as hurricanes that will cause a rise in gas price. For example, in August of 2017 when Hurricane Harvey made landfall, the demand for gas was at an all time high. Motorist panicked and raced to the gas pumps in fear that there would be no gas, industrial leaders scrambled to restore the supply of gas. For three plus days, it was a concern of both consumers and producers when the supply and demand would intersect again. However, in other cases when gas prices are up in price for a period of time, consumers demand goes down. Some consumers will travel less, and some may even trade in there high in vehicles for smaller or energy efficient vehicles.
Gasoline is the primary fuel for mostly all automobiles, and has become a necessity for all American people who drive, and need to get places, so there is always the constant need for gas that makes the demand so high. “While increased demand has some potential effect on the price of gas, the price will help equal out supply of gas with demand,

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This is evident in the simple supply and demand graph; as price goes up, supply will increase as more suppliers will be willing to supply at a high price, but the demand will decrease due to the high price, causing a surplus of products. A real life example would be the milk industry in the United States, where governments put a price floor above the equilibrium price to support the suppliers, causing a great surplus of dairy products. Another example is the San Francisco Earthquake in 1987, after the disaster the demand for bottled water increased drastically, causing a right shift of the demand curve in the market of water, however the supply of bottled water also decreased due to damaged pipes, therefore the price of bottled water increased. Many other suppliers may sell bottled water at that time with a very high price, this is called price gouging. High prices often does two things that benefits the economy, one is that it encourages the consumer to conserve the product and not waste it, the other is that it encourages suppliers to supply when a product is

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