Chapter 1: Introductory Concepts

Gasoline prices keep rising in California while falling nationwide


http://www.latimes.com/business/la-fi-gas15-2009sep15,0,509103.story

|Summary|
This article recognizes that the average price of a gallon of regular gasoline is higher in California than elsewhere in US, which according to experts, is the result of low production and tight supplies in California. It stated that over the last week, pump prices rose through out California, the average cost of a gallon of regular in California went up 5.4 cents, which set a high for the year for the second week straight while nationally, the average price dropped 1.1 cents. Analysts said that some of the reasons for the unusually large difference in price could be the fact that refineries in the state are running short of full production. As for the week that ended sept.4, California refineries produced 5.8 million barrels of gasoline but during the same week last year, the refineries pumped out more than 6.2 million barrels even though oil supplies were nearly 40% lower.

|Connection|
Scarcity by definition is being insufficient for the demand. This article presents itself as an example that relates to the concept of scarcity because it talks about the shortage of production in gasoline resulting in price increase. With the fundamental knowledge of the supply and demand concept, gasoline is regarded as a scarce resource because there is a limited supply, therefore affecting the price rapidly. The demand for gas is even greater now a day because of the economic recession as prices for automobiles have gone down significantly, which means more consumers are buying cars. As a result, the reason for price increase is set off by the demand for gasoline, a scarce resource.

|Reflection|
The market reflects on the price determined by the interaction of consumers, the concept of supply and demand. So there is no doubt gas prices will remain high. Until then, there are temporary solutions such as having hybrid vehicles and electric cars. I believe it’s a temporary solution because the world population is growing exponentially and scarce resources are depleting. Moreover, the more industrialized the country is requires a greater vast of refineries to produce raw materials so USA is lacking to sustain all the states with resources on limited supply of scarce resources.

First day of Economics class. >=]