Discussion 2 Managerial Economics

Discussion assignments will be graded based upon the criteria and rubric specified in the Syllabus.

For this Discussion Question, complete the following.

1.  Read the two articles below that discuss why fuel prices fluctuate. Research two of these types further.

2. Locate two JOURNAL articles which discuss this topic further. You need to focus on the Abstract, Introduction, Results, and Conclusion. For our purposes, you are not expected to fully understand the Data and Methodology.

3. Summarize these journal articles. Please use your own words. No copy-and-paste. Cite your sources.

4. This is due by 11:55pm on the deadline specified in the Course Schedule.

5. During the second week of the Module, you will need to reply to the posts of two of your peers. Your replies must focus on increasing knowledge of the class and must advance the discussion further. Simply affirming your peers does not count as a substantive reply.

6. The replies are due by the deadline specified in the Course Schedule.

Please post (in APA format) your article citation.

1st student response : (Aneel Mannem) :

 

Abstract

Fuel prices crisis has existed for the last 40 years which has defined how economists think about price shocks. Fuel price fluctuations are still difficult to forecast despite the increased understanding of oil markets. Oil prices have always been a surprise to stakeholders including consumers, policymakers, financial market participants, and even economists. However, the magnitude and the timing of fuel price fluctuations depend on oil price fluctuation expectations.

Introduction

The gas price fluctuations are influenced by whether there is a controlling pricing mechanism. When gas prices are controlled by the government and the market-oriented strategy not refined gas suppliers manage production and operation costs. There have been reports on the causes of the decline in the prices of oil in the past years.

Results

There are many reasons for fuel price fluctuations. One of the persistent reasons for fluctuations in oil prices is a shock to global crude due to political events in fuel-producing countries (Baumeister & Kilian, 2016). Other causes include better technologies for the extraction of crude oil and the discovery of new fields. Another reason for price fluctuations is forecasted variations in the global business cycle (Prest, 2018). Last is the shocks of demand with oil inventories which reflects a change in expectations of future shortages of supply compared to the demand in the market.

Most of the declines are however predictable in real-time. One of the reasons for the predictable decline is the cumulative impact of negative demand shocks traced to a slowing global economy (Baumeister & Kilian, 2016). Negative demand shock happens when an unexpected event decreases the demand for oil prices causing suppliers to drop the prices and also when an unexpected event causes an increase in demand of fuel the prices go up to match the demand (Prest, 2018). For example, when the production of oil unexpectedly goes up or down causing fuel price fluctuations. A negative demand can also happen when the global economy is weakened unexpectedly causing price fluctuations since the demand will not below.

Conclusion

The articles found various factors responsible for fuel price fluctuations. One is political factors such that when there is political instability in a fuel producing company the fuel prices may go up. Secondly is the mismatch between demand and supply. When the demand is high prices go down and when demand is low prices go up. Another responsible factor is when forecasts fail the actual business cycle. Also when expectations are not correct demand and supply are altered causing fluctuation in prices of fuel.

References

Baumeister, C., & Kilian, L. (2016). Forty years of oil price fluctuations: Why the price of oil may still surprise us. Journal of Economic Perspectives30(1), 139-60.

Prest, B. C. (2018). Explanations for the 2014 oil price decline: Supply or demand? Energy Economics74, 63-75.

https://www.eia.gov/energyexplained/gasoline/price-fluctuations.php#:~:text=Gasoline%20prices%20tend%20to%20increase,expected%20gasoline%20demand%20or%20consumption.&text=Even%20when%20crude%20oil%20prices,demand%20and%20in%20gasoline%20specifications.

2nd student response (Ragavendra rao allam) :

 

Gasoline prices feature taking care of the sources that establish a very affordable price for a long time and high at a couple of opportunities this might cause damage that is primary oil manufacturing. It seems $1.85 quarts of oil had been plunging into the of November thirty days. This consists of the United States country improve the improvements that drive much better and manage the economic climate that is standard. It defines power businesses that ensure consistency of more significant prices to try to find the research worths. It features resources that could possibly find out the fuel efficiency shall take care of the much larger prices that require fuel-efficient. It features gas price had been a little that is actually small and asks for fuel rate ended up being actually higher. This method describes aspects that can be significant are five, which establish oil manufacturing. Improving expenditures assume and maintain upwards concerning the gasoline places would certainly refine much better (Blazquez et al., 2017).

Fluctuations will influence the gas prices that find out US power. Consider the tracks that contain crude and handle the oil prices to boost the most affordable amounts. It features a gas price to master the production values such as crude oil, and the price autumn defines the results. Gas channels right into the summer season guarantee less market value that comprises of even more drivers will attack the trail. That manages the oil prices that think about the summertime mix will stay on par with the environment. Oil production considers even more quarts is actually mosting likely to be produced in the summer season that is around 10 to fifteen pennies. Particularly in June and October, the cost would have been actually a boost and reduce gradually the smoke would a lot better for the top quality of sky issues thirty days. Temperature is decided on, whereas it is actually comprised of normal mishaps like for instance cyclones and storms which are traditional complete the shore worths. Consisting of resources that might deal with the primary reason and identify the energy and oil rate to boost the oil that is actually reduced sources. This comprises taking care of the regions which are influenced identify the oil price influences business, and handle the surface areas. It consists of geography that adds up too, whereas it appears the manufacturing values will certainly identify the bigger income tax prices. This possibly develops the gas prices in addition to fuel, furthermore; therefore gallon prices must truly be lessened (Charlier & Kahouli, 2019).

References

Blazquez, J., Martin-Moreno, J. M., Perez, R., & Ruiz, J. (2017). Fossil Fuel Price Shocks and CO2 Emissions: The Case of Spain. Energy Journal, 38(6), 161–176.

Charlier, D., & Kahouli, S. (2019). From Residential Energy Demand to Fuel Poverty: Income-induced Non-linearities in the Reactions of Households to Energy Price Fluctuations. Energy Journal, 40(2), 101–137.