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The Law of Supply And Demand: Why It Plays an Important Role in the Low Gasoline Prices We Have Today

The law of supply and demand constantly plays an important role in any capitalist business. For example, if you have limited supplies of a particular product and a lot of people want to buy one, you will usually increase the price. Besides, this is a chance for you and your business to earn a lot of money. However, when there is a limited demand for the product you are selling and you have a lot of it on stock, you will normally price it so low that you will only earn a few cents out of every product you sell just to get rid of the product from your inventory.

That’s basically how gasoline works. If there is a limited supply with a lot of demand for gasoline, the price will increase and vice versa. This is primarily the reason why we are experiencing low priced gasoline since 2002. So, just why is it that there is a surplus of supply of oil and gasoline and limited demand for it?

Well, in order for you to understand this, you need to take a look at Asia. In the past months, the oil companies expected Asia, especially China, to significantly grow and increase their demand for oil and gasoline. This is why oil companies began stockpiling oil reserves and increased the prices because of the expected growth of Asia. However, the expected growth of Asia started to cool down early and there is a significantly high amount of oil in the reserves.

And, because the price for gasoline was so high last July 2008, people began saving money on gasoline. The demand for gasoline fell and up to this day, people are still saving money on gasoline. It may be because people became accustomed to saving money on gasoline or the reason may also be because of the world financial crises that we are also experiencing today.

Also, some people are still skeptical that this kind of price trend for gasoline is just temporary. Although this may be true, you have to consider that the price for gasoline is indeed at an all time low.

People today are also more practical when it comes to buying cars. Instead of buying a gas guzzling sports car, people are now choosing fuel efficient hybrid cars. People are now choosing fuel efficiency over power and only people who can afford the high price of gasoline are considering buying a sports car.

Fuel efficient cars, carpooling, and mass transportation systems are the in thing today. Because of this, the demand for gasoline is continuing to fall especially in the United States which is the number consumer of oil in the world. With low demand for oil and a high amount of reserves, the price will normally go down. If people continue on saving money on gasoline which is very likely, the price for gasoline will still continue to fall.

However, there is news that the cutback from OPEC will significantly lower the supply of oil in the reserves. So, you can expect that the oil will stop dropping in price in the next few months and may even start to rise again. So, if you really want to save money today, you may want to start filling up your car and take advantage of the low priced gasoline that we have today.

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