Why does the price of gas fluctuate so greatly?
I believe we’re in a recovery stage of the business cycle. All the index calculations suggest this. The GDP and CPI indexes have increased over the last year and few months but unemployment index has remained unchanged over the last few months.
The economy has stabilized and there is slow growth. GDP index shows a . 4 percent increase in the fourth quarter of 2012 and a 1. 8 percent increase in the first quarter of 2013. This increase suggests recovery. CPI index shows has increase 1. percent for all of 2012 and shows a steady increase every month in 2013.
There’s also has been a steady increase every year since 2009. This increase also shows recovery. Unemployment index has remained unchanged in June 2013 at 7. 6 percent from May 2013. It has remain constant for the last 5 months at around 7. 6 percent. It has decreased slightly from June 2013 when it was 8. 2 percent. If the unemployment decreases, it’s possible that would set us up for an economic boom.
Why does the price of gas fluctuate so greatly? There are many factors that create price of gas fluctuation; war in the Middle East creating a shortage and production problems creating a shortage. When there’s a shortage, prices go up. What will happen as more and more people in China and India decide to buy automobiles? As more and more people in China and India buy automobiles, the demand for gas will increase.
The increased demand for gas will exceed the supply and will cause a shortage. The shortage of gas will increase the price of gas. What would happen if most US consumers decided to drive electric cars? If most US consumers decided to drive electric cars the demand of gas would significantly decrease. The US is ranked the number 1 consumer of petroleum. If the demand of gas significantly decreased in the US, the supply of gas would most likely exceed the demand and make lower gas prices.