The Rise of Fuel in Australia

1204 Words3 Pages

1.0 Article Summary The Australian Broadcasting Corporation’s (ABC) news article titled, “Petrol price soars, more pain at the pump ahead,” discusses the rise in the price of fuel and its effect on Australian motorists. This article also discusses how this rise in the price of fuel occurred, mainly focusing on its effect on consumers (Janda 2014). 2.0 Introduction The cost of fuel had risen by 6 cents to 158.1 cents in the week of January 5, which is quite a fast rise in price. It was reported by CommSec to be the fastest increase in fuel price records since 2004. The price of unleaded petrol as set by Singapore is the primary benchmark of petrol pricing in Australia (Bureau of Resource & Energy Economics 2014). The main reason why the price of fuel has risen is due to the fact that the Australia dollar has been depreciating and gasoline prices in Singapore have been rising. Since fuel is regarded as a necessity, the increase of fuel prices would have a certain impact on the Australian economy. This will have an effect on a variety of economic aspects which include; demand and supply, elasticity, market equilibrium and disposable income. The goal of this analysis is to discuss the effect that the rise in petrol, holding all things constant (Ceteris Paribus), will have on the Australian economy. 3.0 Analysis 3.1 Demand & Supply In economics, particularly microeconomics, demand and supply are defined as, “an economic model of price determination in a market” (Ronald 2010). The price of petrol in Australia is rising, but the demand remains the same, due to the fact that fuel is a necessity. As price rises to higher levels, demand would continue to increase, even if the supply may fall. Singapore is identified as a primary supplier ... ... middle of paper ... ... to purchase petrol despite its cost. To make a positive note, it is notable that an increase in prices of fuel would increase the nation’s opportunity cost. 4.0 Conclusions To conclude this analysis, it can be noted that any increases in the prices of fuel will increase Australia’s economy as a whole, in other words the higher the costs of logistics will increase the price of products (Australian Competition & Consumer Commission 2014). The consumers will have to handle the burden of having higher costs of products, which would create an inflation. With the increasing price of fuel, consumers might want to alter their lifestyles, such as using public transportation or even carpooling. Vacations and travelling will also have to be cut down. Australia requires further government intervention to control the price of fuel by subsidizing so that inflation may be curbed.

Show More
Related

  • Michael Klare's Blood and Oil

    1520 Words  | 4 Pages

    The author proposes different partial solutions for the "oil problem": a surtax on gasoline consumption, development of mass transport and alternative energy sources, fuel efficiency. In the actual context, these propositions are more or less wishful thinking. A complete change of mind will only arrive when the oil price will reach astronomical heights and when all cheap oil sources will be dried up.

    Read More

  • A Very Brief History of the American Automotive Industry

    1487 Words  | 3 Pages

    Purchasing a car is one of the biggest and most important decisions that someone will make during their lifetime. Over the past several years, the prices of a vehicle have increased significantly due to the rise of inflation. Economists compare averages of vehicles to calculate and determine the cost of every vehicle that ends up on the car lot. To determine the cost they interpret all the above information and include everything from the cost of making the vehicle to the time of selling it. In the long run, the demand for vehicles is inelastic because they become a necessity for many people. However, in the short run, the demand is elastic because the purchase of a new vehicle can be put off for a while.

    Read More

  • Impact of the Recession on the US Auto Industry

    1759 Words  | 4 Pages

    In the United States, modern car manufacturing has been historically dominated by the American companies including Ford Motor Co., Chrysler Group LLC, and General Motors Co. These three companies, known as the Detroit Three, controlled 95% of the market in the 1950’s and the dominance continued until the beginning of the 21st century. In the 1980’s Japanese auto manufacturers entered the United States, a decade later the Germans, and finally in 2000’s the Koreans. By the end of 2009, the Detroit Three only accounted for 45% of the total U.S. auto market. Another factor that had influence on this was constant fluctuations in gasoline prices and price sensitive consumers. According to the U.S. Department of Energy, gas prices hit record high averaging $3.07 per gallon in May 2007 and kept climbing up to $4.08 in July 2008. As gas prices kept increasing, consumer buying trends have been changing. In 2006 sales for SUVs, pickup trucks, and vans dropped 16%, while the market for compact cars rose by 3%. Unfortunately, the Detroit Three were not prepared for this since their...

    Read More

  • Supply And Demand of Gasoline

    1019 Words  | 3 Pages

    In 2004, crude oil producers around the world expected a 1.5% growth in the world’s demand for crude oil. The actual growth rate was more than double the projections at 3.3%. This growth was due to rapidly industrializing of foreign countries such as, China and India. Therefore the lack of crude oil affected the supply of gasoline to consumers at the pump.

    Read More

  • Avocado Microeconomics

    890 Words  | 2 Pages

    Economic events are largely governed by the interaction of supply and demand. The law of supply states that with ‘all else being equal’ (ceteris paribus), as market price of a good or service increases/decreases so will an increase/decrease in quantity supplied. In turn, the law of demand states as market price of a good or service increases/decreases ceteris paribus, the quantity demanded will increase/decrease accordingly. The Australian avocado industry is an indicative example of microeconomics - the study of individual consumer or business decision making and spending behaviour in relation to the allocation of a limited resource and the correlation of supply and demand in determining

    Read More

  • Argumentative Essay About Gas Prices

    1236 Words  | 3 Pages

    Have you ever wondered how gas prices vary a lot and take an enormous toll on our everyday lives? Well soon you will find out who has, and this essay is going to give you all of the facts and interesting information that you didn’t already know about this spectacular topic. And despite how harmful gas could be to mother earth and how financially difficult it could be to pay for…we still need and depend on it in our everyday lives. So first, the reader going to talk about how much the average American spend on gas each month compared to other countries around the world. Then, the reader is going to generate some great information about how gas prices come about, like how do all the taxes and things of that nature come back to just high or low

    Read More

  • Essay On Natural Gas Market

    662 Words  | 2 Pages

    In recent times, In the case of gas, prices for households and businesses are expected to increase significantly in eastern Australia, as the development of new gas export terminals leads to a tightening of supply. As the tightening of supply in the natural gas industry this result in an increase of the gas price in NSW. These increase of gas price effect on the households and business in NSW especially industrial gas users such as trade-exposed businesses. “Industrial gas users in the eastern states face ‘a doubling or tripling’of wholesale prices, with the impacts to be felt throughout the chemicals, fertilisers, food processing and other sectors”(Mark Goodsell, Australian Industry Gro...

    Read More

  • Economics of the Automobile Industry

    2412 Words  | 5 Pages

    As the supply curve moves in the automobile industry, the equilibrium price and quantity sold will change with this shift. When the automobile manufacturers see this shift in supply, they will then raise their prices and the quantity sold will fall. Car manufacturers will also develop...

    Read More

  • Supply And Demand

    1824 Words  | 4 Pages

    The market price of a good is determined by both the supply and demand for it. In the world today supply and demand is perhaps one of the most fundamental principles that exists for economics and the backbone of a market economy. Supply is represented by how much the market can offer. The quantity supplied refers to the amount of a certain good that producers are willing to supply for a certain demand price. What determines this interconnection is how much of a good or service is supplied to the market or otherwise known as the supply relationship or supply schedule which is graphically represented by the supply curve. In demand the schedule is depicted graphically as the demand curve which represents the amount of goods that buyers are willing and able to purchase at various prices, assuming all other non-price factors remain the same. The demand curve is almost always represented as downwards-sloping, meaning that as price decreases, consumers will buy more of the good. Just as the supply curves reflect marginal cost curves, demand curves can be described as marginal utility curves. The main determinants of individual demand are the price of the good, level of income, personal tastes, the population, government policies, the price of substitute goods, and the price of complementary goods.

    Read More

  • Florida v. BuyGasCo Brief

    1520 Words  | 4 Pages

    We offer our views on this subject out of concern about the allocation of indirect costs used in assessing the appropriate gasoline cost value in State of Florida v. BuyGasCo Corporation, 2003-05143 (D. FL. 2003). We regard the allocation system employed in that opinion to be inconsistent with systems in common practice. Use of that system has a potential adverse effect on both the motor fuel retailing industry and the motor fuel market. It should not be employed in judging the issues in the Florida v. BuyGasCo dispute.

    Read More

  • Price Elasticity Of Demand For Gasoline

    237 Words  | 1 Pages

    The article by Mike Moffatt shows the price elasticity of demand for gasoline. According to Molly Espey the average price elasticity of demand for gasoline in the short- run is-0.26 and -0.58 In the long-run, which is a 10% raise in the price of gasoline lowers quantity demanded by 2.6% in the short- run and 5.8% in the long- run.Also, there are a studies were conducted by Phil Goodwin, Joyce Dargay and Mark Hanly at review of income and price elastics in the demand for road traffic and each of them has different study. Furthermore, the realized elasticities depend on factors such as the timeframe and locations that the study covers. If the gas taxes will rise, will cause consumption to decrease.

    Read More

  • Effects of Rising Gas Prices

    414 Words  | 1 Pages

    Finally, many car companies make more efficient cars and hybrid cars. Companies trying to boost their sales through efficient cars and lower gas cost for the consumer. Because of the higher prices of gas consumers are looking for more efficient cars. Gas prices left big companies like Ford, Toyota, and Dodge slow which it had a direct effect in the economy and the workforce. Many people lost their jobs over the passed six months because of the effect of the slow economy.

    Read More

  • The Impact of the Car in Society

    1622 Words  | 4 Pages

    Hartman, Dennis. "The Effects of Cars on the Economy." EHow. Demand Media, 26 Jan. 2010. Web. 02 May 2014.

    Read More

  • Multiple Regression Analysis

    3158 Words  | 7 Pages

    For the independent variable of fuel price, it also does not granger cause the dependent variable of demand for Proton car. It means that the fuel price variable is no significant to the demand for Proton car. However, many studies discovered that the fuel price is a significant response to Proton demand. According to the Johansson and Schipper (1997), the vehicle types and distance driven were affected by the hike of fuel price. This means that the consumers still purchasing the vehicles when the fuel price increased.

    Read More

  • Petrol Essay Introduction

    1081 Words  | 3 Pages

    Nowadays, many petrol pumps provided in Malaysia with a variety of branded like PETRONAS, Shell, Caltex, Esso, BHP and others according to Sung, C. T. (2011). This may cause petrol manufacturers have to compete with other petrol manufacturers to get place in the market line with the changing of economic life. Based on Kosmo! Online News, Irwan Asri Mohd Nor stated that every petrol compan...

    Read More

More about The Rise of Fuel in Australia

Open Document