Oil+hovers+above+91+amid+US+gasoline+supply+jump+-+Simon

Article: Oil hovers above $91 amid US gasoline supply jump

Source: [] Yahoo.com

Date of Extract: Jan 12, 2010

Summary of article: This article is basically about how the oil prices have gone up in US lately. Economists are concerned about this problem, as the increase of price would cause many people to lower their consumptions thus lowering the economy. This connects to the things we learn in class becauseit includes the concepts of supply and demand, cost of production, and elasticity. These concepts apply because after the BP oil incident in the Mexican Gulf, there is a decrease shift of supply curve because of cost of production; as a result, the price of oil will go up. Yet, although the price has gone up, people are still be willing to pay the increased price because oil is a necessity, thus it is a product that is inelastic (PED).

Terms: supply and demand - how a good/service is doing in the market. cost of production - the cost it makes to produce the good/service elasticity - how the quantity demanded of a product will be affected when there is a change in price.

The Market of Oil (just refer to D1, S1,S2; ignore D2)

Conclusion: With the increase of oil prices around the world, it caused a turmoil in the world's economy. Personally, I agree with the economist's point of view of "at the root of that increase would be a very low consumption number." The increased prices of oil will definitely hurt the civilians and the economy. It will cause a potential threat of causing another recession... It is reasonable to raise the oil prices, but I think the government should subsidize so that the oil prices can be controlled.