Business Economics Speech or Presentation Example | Topics and Well Written Essays - 750 words

Business Economics - Speech or Presentation Example   In winter, it is vice versa. Product supply and demand imbalances also cause the prices of gasoline to fluctuate. This is so because at times demand rises unexpectedly or supply declines suddenly due to production problems. When supply is low, people tend to compete for the little available stock, thus increasing the prices. Such imbalances cause the common fluctuations (Stone, 2008).Since 2005, the prices of gasoline have been continually rising. At no given time have the gasoline prices of the previous year been higher than in the current year. Prior to 2004, the prices were relatively stable – around $2 a gallon. With the growing economy and population, there has been global fear that the oil deposits may soon run out. This has led to people being persuaded to use fuel saving vehicles (Verma, 2007). This, however, has not been forthcoming, because the rich still use fuel guzzlers, and governments have been forced to increase prices of gasoline so that people feel squeez ed and obligated to use fuel conservatively.The prices of gasoline rose steadily from 2005 to 2011, at one point reaching a peak of $4 a gallon in 2011. However, they gradually declined to $3 a gallon in following months. The reason that has caused the prices to rise in 2011 was the political tension in the Middle East and parts of North Africa. Situations like this cause downward shift in the supply curve. When supply decreases and demand remains constant, this leads to a higher price equilibrium.