Why is there such fluctuation in the price of gasoline in the Fresno, CA area?
I live in a “bedroom community” where a large portion of the inhabitants commute 70-80 miles round trip to work every day. This leads to a steady demand for gasoline in the area and along the commuting route. The gas stations along the route are well aware of this fact, so our prices tend to not spike very quickly, nor drop quickly because any sudden spikes would easily cause drovers to shop around. Looking at the historical chart for gasoline prices for the last month (GasBuddy.com, 2013), we can see a spike for the longer-than-usual Fourth of July weekend, as would be expected when the demand increases, but if you look further you can see evidence of a canny pricing strategy as well: the average price of gasoline actually falls a little the day before the holiday, remains flat for the holiday itself, then rises the day after. The strategy here was to create a captive market, because once you have left home you absolutely must get back, and that requires more gas. (EPA, 2013) Refineries that are traditionally out of service at this time of year for maintenance are now back up and running, which is why there is a steady decline in prices leading up to the holiday weekend. However, increased summer demand has led to a steady price increase since the holiday weekend.
With an increased demand for gasoline for the vacationing season and an increase in crude oil prices, along with the increased supply of gasoline as refineries come back on line after being down for maintenance, the laws of supply and demand are in full effect.
CHAPTER 3 QUESTION 15
With the loss of a large portion of the citrus crop, citrus prices are likely to go much higher because of the diminished supply, and consumers would be willing to pay higher prices for that citrus there is left. In addition, the shift in focus from corn as a food source to corn as a fuel source will cause the price of the corn crop to rise as well, as again higher demand for a lesser supply would cause consumers would be willing to pay higher prices for what little corn there is left.
This situation could also have a secondary effect on food prices in the long term, as farmers in the next few years switch some of their available acreage to other crops, namely citrus and corn. Citrus is a very fragile fruit, and some farmers may switch to in in hopes of cashing in on the potential devastation of the crop again in successive years. Farmers may also switch to corn as the President advances his alternative fuels initiative to cash in on the increased demand for a crop that not has multiple purposes, namely as a food source and as a fuel source.
Any changes in the supply of a crop is going to have a matching effect on its demand, and may also have secondary consequences as farmers attempt to shore up their chances for a successful crop and cash in on the potential instability of others.
CHAPTER 8 QUESTION 11
I definitely think that the internet has created more competitive markets, as the availability of the information on the prices of the products that a retailer carries is now readily available to not just their local customers, but to the entire