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Monday, October 10, 2005

 

Finally a Real Explanation!

Finally an article that explains the reason for high gas prices! The Gazette printed an article by an economist from the University of North Texas who gives a clear explanation of supply and demand. Constantly hearing from the media and even Donald Trump that the gas prices are determined by the government or even a single person is absurd. Poor Mr. Trump, he may be rich but his schooling is not complete in the Econ department. Hearing people give their explanation of prices is crazy when one simple graph explains it all!

In the article "Let's not be too hasty with charges of price gouging", Bernard explains the increase of prices due to the decrease in supply (from the hurricanes) has given us the results of higher prices. The weeks after the hurricanes and thus increase in prices, the economic theory had been proven, demand fell by 5 percent. Even though this decrease in demand is not enough to bring prices completely down it is showing an effect in the market for gas. One illustration that I thought was relevant was just showing the increase in prices for lobster in the New England coast when there was a storm that destroyed the fishing tools and decrease the supply of lobster and thus created an increase in price.

Our resources are being used up daily and we do not have an infinite amount of gasoline to use, so I can't wait to see how people react to the natural increase in prices over time as the supply decreases. It seems that gasoline is something that virtually everyone uses and so when supply decreases by natural events people tend to jump to calling it a political issue. Now if people would just take one Economics course they may better understand the fluctuation of prices. Then they could stop pointing the finger at everyone else and start pointing at themselves; after all actions speak louder than words.

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