Case Readings:
Anderson, R and J. Buol (2005). "What is Driving Oil Prices." The Regional Economist. The Federal Reserve Bank of St. Louis. Retrieved from:
https://www.stlouisfed.org/publications/re/2005/a/pages/oil_prices.cfm
1. How do changes in supply and demand effect oil prices?
2. Which two countries are the largest consumers of petroleum products?
3. Explain what happens to price and quantity of oil when the following events occur:
a. Households increase demand for hybrid and electric vehicles.
b. Crude oil reserves are discovered in Venezuela.
For each event, you must specify how it affects demand, quantity demanded, supply, or quantity demanded. It is also important to demonstrate how the change will affect the market demand or supply curve. Also, be sure to state any assumption you are making regarding the relationship of the event and oil.
e.g. The increasing use of plastics to produce a wide range of products.
Assume that petroleum products are used as a factor of production. This will increase the demand of oil and shift the demand curve to the right. This will cause the price and quantity of oil to increase.
4. If you consider a product like gasoline, would you favor price control so that you pay less than the current price at the pump? Why or why not?
Energy Information Administration. 25th Anniversary of the 1973 Oil Embargo. Retrieved September 1, 2011.