Tuesday, May 27, 2008

Our Response to Gas Prices

With my fiancé and I able to carpool approximately 2.5 x per week, I expect to save $400-500 in commuting costs during the remainder of 2008 at current gas prices. While many people are upset about the price of gasoline, I am worried about enormous heating bills come winter. While we have a wood stove (for when we are home and awake), I am expecting a massive increase in my heating bill come winter.

Listening to reports on the news, they are touting the fact US demand for oil is down. Unfortunately, these reports do not tell the entire story. As anyone who has studied basic economics understands, higher prices (caused by a shift in the supply curve to the left) will cause quantity to go down – even if the demand curve remains unchanged. I want to see is a shift in the demand curve to the left, it would lead to dramatically lower prices. Hopefully, it will happen.

1 comment:

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