Background
In the contemporary world, the global economy is a sphere that connects multiple sectors, and therefore, depends on different events’ influence. Attack on one of the largest United States pipelines, which carries almost half of the East Coast’s fuel supplies, is severe damage to a well-functioning system. It implies that the provision of large companies and distinct individuals with transports gasoline, diesel fuel, and jet fuel is endangered. This work will provide the best strategies to change demand, and discuss if is it possible to alter the supply and demand and whether is it possible for the government to keep the prices at the same level. In addition, competition between businesses and consumers in the volatile market will be examined.
Discussion
It is necessary to explain the concept of demand and supply before a comprehensive discussion, to create an accurate insight into the topic. According to Long, “an increase in price would result in a decrease in quantity demanded, while a decrease in price would represent an increase in quantity demanded.” It implies that a change in the volume of fuel available shall conceive an increase in demand, resulting in a higher price. However, there are strategies to change existent demand to prevent an increase in prices related to resources’ scarcity. The best method is to change the customer’s desires and expectations and switch the demand for one product to another (“What factors change demand?”). For instance, the companies can launch a program to promote electric cars, resulting in less demand for transports gasoline and diesel fuel.
In my opinion, supply and demand for most of the products, including the fuel, are not consistent values, as they can be influenced and, therefore, altered in many ways. For instance, the price of products is the important point that directly impacts the discussed concepts, the dependency of which was explained in the previous paragraph. Besides, consumers’ and competitors’ influences, along with global events, also can alter demand and supply (Long). It implies that altering the supply and demand for most products in the present-day market is a common phenomenon.
Federal and State governments are able to keep the prices the same for the consumers through regulations. According to the above-mentioned rule, the prices for different types of fuel are expected to rise because the reduced supply and the demand that was not changed would not be balanced. Therefore, to prevent the cost of the products from going above until the issue with the pipe is fixed, certain actions can be implemented. The government can directly set prices at a certain level that is beneficial for consumers but less attractive for suppliers unless the taxes they pay are reduced (Tejvan). That would prevent the rise in the fuel cost and assist in the situation’s stabilizing.
In this situation, when a business and consumer compete in a volatile market due to skyrocketing gas prices, both sides can be benefited from the government’s regulations. It is possible that enterprises, which consume a high volume of the product, are not obligated to pay prohibitive taxes if this sector of economics is expected to rise (Tejvan). Simultaneously, the governments can make more attractive prices for gas for individuals, or the competition could become less intense if one of the sides’ demands would fall for some reason (Tejvan). Because of the limited volume of the product in the volatile market, a balance between a business and a consumer’s demands and supply that conceive the competition can be adjusted. Supply and demand are vital for global economic concepts, which shall be taken into consideration as it affects prices and competition between businesses and individual consumers. Despite the complicated situation described in the scenario, the governments still can prevent the costs of fuels from rising through regulations.
Works Cited
Pettinger, Tejvan. “Government Price Controls.” EconomicsHelp, 2018, Web.
Long, Nicole. “What Can Make a Demand Curve Shift?” Chron, Web.
“What factors change demand?” KhanAcademy, 2021. Web.