To: Les Singer; Secretary, DOE From: Policy Group Office of Secretary Les Singer Subject: Answers for the reporters I know that there a many questions being asked in regards to gasoline prices and comments made by J.R. We as the policy group are doing the best that we can to work on answering all of your questions and coming up with explanations to make sure that you fully understand. The answer to your question on why price ceilings will prevent the laws of supply and demand from operating is actually quite simple, but before answering it you must understand what a price ceiling is.
Gas Prices Should be Lowered Gas prices can be expensive most of the time and almost everywhere you go. It’s hard to find a reasonable gas price. Maybe you should blame the global demand for gas prices being so high.
Have you ever wondered about the Dakota access pipeline and thought is it good or bad. The Dakota access pipeline is an “Oil pipeline that would run diagonally across Iowa, through 18 counties, from northwest Iowa to southeast Iowa” (Tyler Durden, 2016). Even though I do not support the pipeline, because of damaging reasons, it does help our economy become more desirable. First I do not support this pipeline considering it does not help our environment.
Dakota Access Pipeline “What is this you call property? It cannot be the earth, for the land is our mother… how can one man say it belongs only to him?” (Massasoit 1). Over the past few months, a land related disagreement has emerged between an American Indian tribe called the Standing Rock Sioux and the United States Army Corps of Engineers (USACE). The dispute revolves around the creation of a 1,172-mile pipeline which will carry crude oil from Sioux territory in North Dakota to Illinois (Energy Transfer 1).
The Dakota Access Pipeline has been a very controversial subject, it makes you truly think what would be best for most people in the situation. Like every story, there are two sides, and what one finds right or wrong is up to them. Here is exactly what the Dakota Access Pipeline is, and the pros, and cons. The Dakota Pipeline is a giant project that will run an oil pipe from North Dakota to Patoka, Illinois that's around 1,000 miles of 30-inch pipes.
I, Sitting Bull, am very disappointed in the actions taken by the United States Government. In the 19th Century, my people and I were endlessly treated terribly and attacked by the U.S. Government. We had to defend ourselves when the colonists started to move out west almost 150 years ago, and we are still facing the same problems today. The Dakota Access Pipeline will poorly affect my people, the Sioux.
The Dakota Access Pipeline, has sparked quite the controversy. The oil pipeline would stretch over four states, and has many positive and negative possible effects. Many can debate whether or not this pipeline is ethically correct, but no one can debate the few positive economic effects on the nation. One such effect, “1,500 jobs total per year in Iowa for the course of construction.” (Sammon)
No matter the cost of gas prices, the stations will still be full since one of America’s top natural resources is gas and if gas prices go down income follows as directly
I feel either way, the consumer is going to pay the price. With both approaches, companies will pass the cost onto the consumer. The market will be of no use in controlling the prices by regulated utility companies. The Public Utilities Commission will simply grant an increase in rates in order to insulate the utility from any
However, if gas prices are very low, then consumers will buy lots of gas. This is bad because fossil fuels are limited and drilling for oil can be hazardous to the environment. If demand is greater than supply of gas, there could be a shortage of gasoline, causing prices to skyrocket.
On the contrary, the price elasticity of demand for gas is quite inelastic. This means that the buyer will purchase gas at almost any set price since it is necessary component to facilitate transportation. The different elasticity for the supplier and buyer allows each individual gas station to establish pricing based on their needs. Ultimately, if a station needs to increase prices the inelastic demand allows it do so.
Lowering gas prices may seem good for consumers but is quite the opposite for people that work in the oil industry. Patrick Reddy writes that for the first time in five years, the price of a barrel of oil went below $50. Lowering gas prices is hurting the oil industry and is causing a big sell-off in energy stocks, and has caused a dip in the markets. Lower gas prices may seem good now, but Patrick Reddy states that lower gas prices means “a possibility that federal gas tax will increase in the future.” (Patrick
If the government sets the price too high, many people would not have enough money to get to the places they need to go to such as school, work, and medical places. On top of that, many gas stations would go out of business because the demand for gas would be low so they are losing profit. However, if a lower set price issued then the demand for gas would increase causing long lines and a major shortage of gas. Gas stations would have to give out less amounts of gas and set limits of how much gas that people can get so it can be fair for everyone.
Now gas is like a competition, you have to find the best prices before anyone else does. You do not want to wait for one open gas pump, which will take about ten minutes considering the people who clean their cars while waiting to fill up their tank. Not only do they clean their cars while getting gas, but they buy things they want from the store which takes about five minutes and they always take their time. Gas prices can vary during certain times periods. Many things can cause gas prices to skyrocket, such as supply and demand for crude oil, so if the gas is $3.89 it can become $4.76 which is ridiculous.
1) Government may intervene in a market in order to try and restore economic efficiency. One of the ways the government intervention can help overcome market failure is through the introduction of a price floors and price ceilings. If prices are seen to be too high, price ceiling or a maximum price could be imposed on a market in order to moderate the price of the product. This policy is often used when there are concerns that consumers cannot afford an essential product, such as groceries. The effect of a maximum price could create a shortage as it could lead to demand exceeding supply for that particular good.
