Article 1
Demand, supply, and market equilibrium
This article relates to demand, supply, and market equilibrium in the economic concept. This article relates to the citizens of Egypt and their demand for gasoline. A demand is something an individual wants, can afford it, or planning to buy it. As for gasoline, it is one of the most important resources in the world. Therefore, almost every person that has a private transport has a demand of gasoline. The problem arises when the price of gasoline rises rapidly but there are no other substitutes that are able to replace it. So no matter how high the price of gasoline rises, people will still need it somehow. Furthermore in the article, even with the shortage of petroleum that occurred in the town, the people of Cairo are still demanding petroleum. It has been known that even though the price of petroleum has risen, it will not affect the demand of petroleum. The main reason of the shortage of petroleum is because of the lack of supply of petroleum due to problems such as political instability and street protests that are caused to the tourism industry. Therefore, the foreign demand has decreased which has affected one of a source of foreign income.
In the equilibrium graph, the equilibrium is formed when the two curves are combined together. In order to determine a point where there are no surplus or shortage, the two curves meet at a point where the price and quantity will be shown in the graph. When the price has been known, the market price will be shown so that there will be no surplus. Due to the lack of supply and there is demand for petroleum; it will cause a shortage in the market.
The graph above shows the supply and demand of petroleum. As stated in the article, the supply of petroleum has decreased but the demand for it still remains the same. When the supply of petroleum has decreased, the price of it will increase. But at the same time, when the price of petroleum increases, the quantity demanded will decrease as well. Therefore, if the price of petroleum increases while it affects the quantity demanded, the demand of buying petroleum will still be the same.
In my opinion, since there are no substitutes for petroleum besides reducing the use of it, people should not always depend on their private transportation that uses petroleum such as cars or motorcycles. If they reduce the use of petroleum, they might most likely save a lot of petroleum and prevent any shortage crisis in the future. Since the price of petroleum will increase, people who have less income actually depend more on public transportations such as trains, taxi, or buses. This not only helps save their use of income, but also save petroleum that benefits the country and the environment. For example, Malaysia’s public transportation is convenient for many citizens when they want to go to places that have long distances since it is well priced and reasonable. Other than that, carpooling is one of the good ways to reduce the use of petroleum since only one vehicle is needed instead of many at the same time. Besides, in the country of Cairo, the government should also increase the price of private transport since Egypt does not produce any cars in their country. This will lead to the quantity demanded for private transport to decrease, as Egypt will not suffer a loss due to the country that does not have a national car brand. Unlike Malaysia, it has its own national brand of cars such as Proton. In this case, the government cannot simply increase the price as it will lead to a loss of profit. Therefore, if the price of private transportation increases, there will be less quantity demanded and it will result in fewer cars to consume petroleum. Furthermore, public investments in transportation industry can be made so that better vehicle operating efficiencies can be made. Such as an example of a country is Malaysia; investments in the transportation industry will lead to government producing national cars with better efficiency. Not only producing cars that saves petrol, but it also profits the government by having citizens purchasing national cars. Besides, the increase of fuel prices can lead to consumers or producers to have an interest in fuel-efficient transportation. The resource of petroleum has been decreasing year by year and it may someday be used up. Although it may take many years to create an environment where people are less dependant on private vehicles, but public investments on roads or waterways can reduce traffic congestion or delays so that vehicles can consume less fuel on the way. Most importantly, these actions must be followed by a large amount of citizens so that everyone can reduce the usage of petroleum and the shortage crisis can be solved and also prevent people from buying illegal fuel from black markets. When black markets exist, it will cause a negative impact on the economy because it is the taxes that protect the local economy. So if the producers in the black market import fuel from other countries without paying taxes, they will make a huge profit but at the same time, they will not support the local economy but the foreign economy instead. Therefore, the local government should consider jail sentences for the illegal producers and also consumers who buy illegal fuel because they are involved in illegal activities. In other words, they are no different than buying stolen goods.
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