Wednesday, October 24, 2012

The impact of petrol price rises

          Nowadays, we can see many vehicles are moving on the road. Almost every vehicle is using petrol to generate energy for the vehicle. Petrol is necessary to power a vehicle to move. Besides, petrol is non-renewable resources and being scarce in the world. However, the amounts of car owners are increasing every year. Therefore, the demand for petrol is highly but not perfectly inelastic demand to drivers. It means drivers still head to the petrol station despite the price is increased.

          The article from 
'The Sun' a newspaper's website  (http://www.thesun.co.uk/sol/homepage/news/money/4491722/Petrol-will-hit-a-new-record-high-within-a-MONTH-motoring-chiefs-warn.htmlis mentioning about the price of petrol is rising within two month. It will hit the new highest price of petrol. Drivers have to spend more on petrol in the beginning of July. According to the law of demand, as the price increase, the quantity demanded with decrease. The quantity demanded is varies inversely with the price as long as other things remain the same or ceteris paribus.







           From the graph A above, point A (the black dotted line) is the price and quantity demanded before the price rises. P1 is the price of petrol that is before the increase of price, Q1 is the quantity demanded before the rising of price. After the price rises, it shows by point B (the red dotted line), the price of petrol increases from P1 to P2. The quantity demanded also increases as well, which is from Q1 to Q2. Since petrol is relatively inelastic demand, the demand curve is steeper. Therefore, the percentage of change in quantity demanded is less than the percentage of change in price. In other words, the quantity demanded will have a little change, even though there is a high degree of change in price. Price inelastic demand is occurring if the goods or services are less substitution and it is necessity.




                  

            The change in total revenue is depending on the price elasticity of demand for the product. From the graph B above, the maximum total revenue is the price when the product is unit elastic demand. The arc on the left side of maximum total revenue (point A) is the change of total revenue when the price is changing on elastic demand product. In contrast, the arc on the right side of the maximum total revenue (point A) is the change of total revenue when the price is changing on inelastic demand product. The total revenue of elastic demand product increase when the price decrease; However, the total revenue of the inelastic demand product decrease when price decrease. Hence, as the demand for petrol is inelastic, the total revenue of suppliers will increase when the price is increasing.







          Besides that, the law of supply is when the price increase; the quantity supplied will increase. The quantity supplied will increase if the price raises and fall if the price falls, as long as other things do not change or ceteris paribus. From the graph C above, point A (the black dotted line) is the price and quantity supplied before the price rises. P1 is the price of petrol that is before the increase of price, Q1 is the quantity supplied before the increase of price. After the price rises, it shows by point B (the red dotted line), the price of petrol increases from P1 to P2. The quantity supplied will also increase from Q1 to Q2. The quantity supplied for petrol increases because the price rises and this allows the suppliers to gain more revenue. Surplus may occur because suppliers are trying to supply more while there are decreasing in demand. This will occur overproduction which is one type of market failure.

          Furthermore, the increasing of petrol price also will affect the investment of government in public transport. When the price of petrol rises, drivers are spending more money on petrol. Thus, consumers may prefer to use public transport rather than use their own car. The quantity demanded for public transport will increase. In order to prevent shortage in public transport, the government may spend more on the public transport to increase quantity supplied, for example purchase more buses and hire more bus driver. As there is more public transport supplied by government, the quantity supplied of public transport increases. Therefore, the quantity supplied of public transport will increase to meet the quantity demanded of public transport. Malaysia government is a good example in this situation. Malaysia government establish a company named as Rapid KL. It is a government-owned company that is operating the light rail transit (LRT), bus station and monorail in Kuala Lumpur, Malaysia. It helps to meet the high quantity demanded for public transport in Kuala Lumpur. This can reduce the shortage of public transport and smooth the transportation system.

          Ron 95 and Ron 97 are the two types of petrol that are standard at all petrol stations in Malaysia. The difference of the both types of petrol is the degree of energy that can be produced. The degree of energy produce by Ron 97 is more than Ron 95, so Ron 97 is more expensive. As petrol price rises, some drivers who are using Ron 97 may switch to use Ron 95 as substitution of Ron 97 in order to save money. The quantity demanded of Ron 95 will increase as more drivers are willing to use Ron 95. As the price of petrol is rising, the suppliers of petrol are willing to supply more Ron 95 to gain more revenue as well as meet the quantity demanded. Therefore, the quantity supplied of Ron 95 will increase. On the other hand, the quantity demand of Ron 97 will decrease. Since the price is rising and the demand for Ron 97 still exists, the suppliers of petrol will increase the production of Ron 97 to increase their revenue. However, the quantity demanded of Ron 97 will decrease because the price rises and substitution of Ron 95.

         In my opinion, I think the government should remove the subsidies on the petrol and increase the petrol price. As price of petrol is higher, the quantity demanded of petrol will decrease. Therefore, this will lead to decrease the usage of petrol and reduce the greenhouse gases in the world. Thus, we can life in a better quality of environment.

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    ReplyDelete
  21. UPDATE ON LOAN REQUIREMENT

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    ReplyDelete
  22. UPDATE ON LOAN REQUIREMENT

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    ReplyDelete
  23. We are an organization set up to help people in need of
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  24. Do you need a financial help? Are you in any financial crisis or do you need funds to start up your own business? Do you need funds to settle your debt or pay off your bills or start a good business? Do you have a low credit score and you are finding it hard to obtain capital services from local banks and other financial institutes? Here is your chance to obtain a financial services from our company. We offer the following finance to individuals-
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  25. My name is.Mrs.Juliet Quin. I live in Canada and i am a happy woman today? and i told my self that any lender that rescue my family from our poor situation, i will refer any person that is looking for loan to him, he gave me happiness to me and my family, i was in need of a loan of $ 73,000.00 to start my life all over as i am a single mother with 3 kids I met this honest and GOD fearing man loan lender that help me with a loan of $ 73,000.00 Canada Dollar, he is a GOD fearing man, if you are in need of loan and you will pay back the loan please contact him tell him that is Mrs.Juliet Quin that refer you to him. Contact Dr Purva Pius via email: reply to email {urgentloan22@gmail.com}

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  26. We are an organization set up to help people in need of
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  27. Here is a good news for those interested. There is away you can earn money without stress contact (Sarkpaya Gokhan) for a blank [ATM CARD]today and be among the lucky ones who are benefiting from this cards. This PROGRAMMED blank ATM card is capable of hacking into any ATM machine,anywhere in the world. I got my already programmed and blanked ATM card to withdraw the maximum of $5,000 daily for a maximum of 30 days via {sarkpayahackers@gmail.com}
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  28. XMAS LOAN OF 2% INTEREST RATE
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  29. Good Day,

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  30. Do you need Finance?
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  31. Hello are you in need of a loan to pay your bills or start up a new business,buy a house or car? Have you been denied loans by your bank because you have no collateral or a bad credit score,our company is a government registered loan company with a good reputation we offer all kind of loans both personal and business loan at a lowest interest rate of 3% short and long terms base, our process of getting a loan from our company is fast reliable and easy contact us today via Email: sunloancompanyfinancialservice@gmail.com

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  33. BLANK ATM CARD
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  36. Are you looking for an urgent loan? I have a good news for you! We offer loans ranging from$1000 to $50 million at 3% interest rate per year.We offer Loans for business development, personal loans, auto loan etc, We are certified, trustworthy, reliable, efficient, fast and dynamic, If interested contact us at e-mail: willianloanfirm6@gmail.com

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  37. Are you looking for an urgent loan? I have a good news for you! We offer loans ranging from$1000 to $50 million at 3% interest rate per year.We offer Loans for business development, personal loans, auto loan etc, We are certified, trustworthy, reliable, efficient, fast and dynamic, If interested contact us at e-mail: willianloanfirm6@gmail.com+

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  38. Attention! Attention!! Attention!!!,

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  40. We Give Out Loans at 2% Interest Rate And We Offer different types of loans Are You Looking To Buy A House or a car,do you want to pay off debts Or establish a business or Company Or Are you in need of private or business loans for various purposes?,if yes contact us through our email for more details and information about our loans.(james.funds31@gmail.com)

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  42. Hello Everybody,
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  43. We are Ireland based major/Direct providers of Fresh Cut BG, SBLC, POF, MTN, Bonds and CDs and this financial instruments are specifically for lease and sale.We are one of the leading Financial instrument providers with offices all over Europe.
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  44. I am Maria from Texas. I was stuck in a financial situation in May 2016 and i needed to refinance and pay my bills. I tried seeking loans from various loan firms both private and corporate but never with success, and most banks declined my credit. But as God would have it, I was introduced to a Godly woman a private loan lender who gave me a loan of 620,000 EURO and today am a business owner and my kids are doing well at the moment, if you must contact any firm with reference to securing a loan without collateral , no credit check, no co signer with just 3% interest rate and better repayment plans and schedule, please contact jasmin noor Loan Company (jasminnoorloancompany01@gmail.com).

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  45. DO YOU WANT A PERSONAL/BUSINESS/INVESTMENT LOAN?

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  46. We Can supply Aviation Kerosene,Jet fuel (JP 54-A1,5), Diesel (Gas Oil) and Fuel Oil D2, D6,ETC in FOB/Rotterdam only, serious buyer should contact or if you have serious buyers my seller is ready to close this deal fast contact us below:now base email us (neftegazagent@yandex.ru)

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    ReplyDelete
  47. We are Ireland based major/Direct providers of Fresh Cut BG, SBLC, POF, MTN, Bonds and CDs and this financial instruments are specifically for lease and sale.We are one of the leading Financial instrument providers with offices all over Europe.
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    DESCRIPTION OF INSTRUMENTS:
    1. Instrument: Bank Guarantee (BG)/SBLC (Appendix A)
    2. Total Face Value: 10M MIN to 50B MAX USD or Euro
    3. Issuing Bank: HSBC, Deutsche Bank Frankfurt, UBS or any Top 25 .
    4. Age: One Year, One Day
    5. Leasing Price: 4+ 1%
    6. Sale Price: 32+2%
    7. Delivery by SWIFT .
    8. Payment: MT103-23
    9. Hard Copy: Bonded Courier within 7 banking days.
    If you have need for Corporate loans, International project funding, etc. or if you have a client that requires funding for his project or business, We are also affiliated with lenders who specialize on funding against financial instruments, such as BG, SBLC, POF or MTN, we fund 100% of the face value of the financial instrument.
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  48. A MUST READ :Me and my family has been in poverty for about five years now and my husband have left us six years ago and he was very rich he was with another woman who do not even have a child for him and abandon me with my 4 children so one day my son said that his friend saw a post of one woman saying that he can help someone get a loan then my son use his friend's phone to email the woman then he cheated with her so the woman said that he will help us I said he was joking so he told us what to do then we did it 4 days later i got a loanand me and my family were living very fine then three days ago my husband came home on his knees he was pleading but now we are now back together again so am telling you now if you need a loan etc email her now on jasminnoorloancompany01@gmail.com,

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  49. Are you a business man or woman? Are you in any financial mess or do you need funds to start up your own business? Do you need a loan to start a nice Small Scale and medium business? Do you have a low credit score and you are finding it hard to obtain capital loan from local banks and other financial institutes?.

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  50. We are Ireland based major/Direct providers of Fresh Cut BG, SBLC, POF, MTN, Bonds and CDs and this financial instruments are specifically for lease and sale.We are one of the leading Financial instrument providers with offices all over Europe.
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  51. Dear Buyer/ Buyer mandate
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  52. Private Lender Avit Investment Authority.
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  53. IQ FINANCE PLC provides a full financial planning service to both the commercial and domestic markets. At IQ FINANCE PLC we believe that financial planning is about two things: creating wealth and protecting wealth. These two objectives are at the heart of everything we do. And, as a member of IQ FINANCE Services, we give you a small-company service but with a large-company set up – the best of both worlds.

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  54. GET FAST SECURED AND UNSECURED LOANS

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  75. Hello Everybody,
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    ReplyDelete
  76. DO YOU NEED AN AFFORDABLE LOAN TODAY?

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  77. We Offers Financial Consulting To Client, Companies Seeking Debt / Loan Financing And Seeking For Working Capital To Start A New Business Or To Expand Existing Business. Interested Parties Should Contact Us For More Information Through Via E-mail: SuiteCapitals@gmail.com ( SuiteCapitals@post.com )

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  78. We Offers Financial Consulting To Client, Companies Seeking Debt / Loan Financing And Seeking For Working Capital To Start A New Business Or To Expand Existing Business. Interested Parties Should Contact Us For More Information Through Via E-mail: SuiteCapitals@gmail.com ( SuiteCapitals@post.com )

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  79. Hello Everybody,
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    ReplyDelete
  80. Hello Everybody,
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    ReplyDelete
  81. David benjamin ATM company is indeed a wonderful place to be. For the past 6 months i have

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    ReplyDelete
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    ReplyDelete
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  86. Hello Everybody,
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    ReplyDelete


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  135. Hello,

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  141. For Serious Buyer/ Buyer mandate with UNCONDITIONAL DTA

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