Question

You will be responsible for writing a paper (2 pages, double-spaced) regarding gasoline prices. Please use a credible business/economic newspaper (Wall Street Journal, Business Week, the Economist) and analyze the article. -What is the article about? -Who are affected? -What factors are causing the increase/decrease in gas prices? -How does the article relate to on inflation? -What do you foresee in the real estate economy in five to ten years?

Answer 1

Gasoline is the fuel which combusts at the ignition of spark in the automobiles. However, Gasoline is also used for running of high-end vehicles and automobile engines of many high-end crafts. In the recent years, we have noticed that the prices of gasoline have touched sky high. Let us discuss the causes and effects of this rise in prices of Gasoline.

                                   Gasoline price rise affects almost everybody. This is because, almost every person in the world use automobiles for transportation and communication. Many of us own vehicles whereas many people hire vehicles for their transportation. Hence, if there is a rise in the prices of Gasoline, it will directly impact those people who own their personal vehicles directly, as they will now require to pay higher for the same quantity of gasoline and it will also impact those who hire vehicles, as now they will require to pay higher for the same distance of communication as compared to earlier. Moreover, the rise in prices also affects those firms which use gasoline to fuel up their machines and factories.

                                  Gasoline price increase is caused by multiple factors. One of the primary causes of the rise in gasoline prices, is the slowly depleting natural resource. The availability of gasoline is slowly decreasing, thereby reducing the possibility of the sell of gasoline at lower costs. The extractors of gasoline are therefore now demanding much higher prices for the same quantity of gasoline. Yet, another critical factor behind the rise of gasoline prices is the ever-increasing demand for gasoline. With each day passing by, more and more vehicles are coming in to the roads, thereby increasing the demand for more and more gasoline. This rise in demand negatively impacts the prices of gasoline as due to higher demand, the distributors seek higher profit margins and increase the price.

                                With the increase in the prices of gasoline, almost the price of all the commodities that are consumed by the people become dearer. This is because, the rise in gasoline prices increases the transportation costs of the quantities which are consumed by the people. This increase in the transportation charge is being passed on to the consumer and the prices of the commodities increases in the market. This overall rise in the market price leads to inflation. Inflation caused by this rise in fuel prices is one of the common features of the current inflation existing worldwide.

                                  The real estate economy is already experiencing a huge rise in the price of the land available, because of the same reason mentioned above for the gasoline price rise. The availability of Land is also slowly decreasing, thereby reducing the possibility of the sale of land at lower costs. The owner of land is therefore now demanding much higher prices for the same piece of land. Yet, another critical factor behind the rise of land prices is the ever-increasing demand for land. With each day passing by, more and more people are coming up with demand for land of their own, thereby increasing the demand for more and more land. This rise in demand negatively impacts the prices of land as due to higher demand, the owners seek higher profit margins and are increasing the price. In the next few years, we might witness a scenario where free land might be totally inexistent.