Supply and Demand on Oil

The oil facilities in Iraq were attacked in 2004 but the United States and China raised the demand for oil. There was so much demand for oil by these two countries that it brought up the quantity demanded which changed the equilibrium and that caused the price for gasoline to become higher than before it got to $40 dollars per barrel of crude oil by June 2004. The price raise could not be helped because of counties like the United States and China with stronger than most economies. The people who lived in these countries still drove and needed to get around to and from work every day.  That is why the demand went up which then lead to the price being raised on barrels of crude oil. The same thing happened with the Motorola Droid. When the smart phone first came out everybody wanted one it was the big new thing so the equilibrium was very high. The equilibrium being high made the price also is very high. Then over the months less and less people wanted them causing the equilibrium to go down making the price drop back down. They wanted whatever the new hip big thing was at the time weather it was the I phone 3gs or some other smart phone. Over the next few months the price went down and continued to go down until they released the droid 2 but, that’s not shown in the graph. You can see the change in price over time on the Motorola Droid on the graph shown. Those two examples correlate because Countries like the United States and China had a high demand for gasoline raising the price up. Then there was an extremely high demand for the Motorola Droid when it first came out so the price was high. The demand was high in both cases causing price to be high.

Then OPEC agreed to bring up the daily quota to 2 million barrels of crude oil per day. That makes the supply shift upwards on the graph which brings down the equilibrium and that made gasoline price go back down. A great example for this other than the price for gasoline would have to be televisions right around this time. Companies that make televisions such as Samsung, Sony and, many others try to put out a lot of T.V.’s for Super bowl Sunday. They have a huge stock of T.V.’s on marked down prices to get rid of them. There are so many televisions that it brings the equilibrium down which brings the price down. Right around this time the next year models of televisions will be coming out which is another reason why they want to get rid of the old models. The two examples correlated because price was high in both then supply raised bringing the price back down.