Changes in Supply, Demand and Price
University of Phoenix
ECO 360: Economics for Business- 1
October 11, 2005
Introduction
The law of demand states that when the quantity demanded of a product rises, the price of that product should fall; while the law of supply states that when the quantity supplied rises, the price of that product should rise (Colander, 2004). As this winter season approaches, the cost of heating one’s home is sure to rise given the chilly temperatures experienced recently in some parts of the country. Another factor is the result of Hurricane Katrina and its destruction of the oil supply in the Gulf Coast Region of the United States.
Article Summary
In the article Natural Gas Price Surge Could Have Customers Feeling the Heat This Winter, the authors first offer consumers suggestions of how to “winterize” their homes. The term “winterize” refers to the use of home improvement to weatherproof a home. Some of the suggestions include using weather-stripping on the windowsills, and using caulking to fill in cracks in windows. The authors also give suggestions regarding setting thermostats to 68 degrees and turning the temperature down to 120 degrees on the hot water heater. And they go on. All of these suggestions are designed to help consumers save money on the gas and electric bills this winter.
The authors, Elwin Green and Teresa F. Lindeman also look at energy prices from prior year. The U.S. Department of Energy’s Energy Information Administration said that:
Consumers who use natural gas to heat their homes can expect to see their heating bills increase by 48 percent, and users of heating oil, propane and electricity can expect increases of 32 percent, 30 percent and 5 percent respective ...