Demand Elasticity of Oil
In the world of economics there is a concept called Demand Elasticity which helps us measure price percentages. Demand Elasticity is a measure of how much the quantity demanded of a good responds to the change in price of that good. Also when Elasticity is mentioned in economic terms the response that is received about a certain product is always calculated in percentages. Here in this article it is mention how the demand elasticity has changed the percentage due to the percentage change in the price. In this article it is stating how a barrel of oil has had a 575% change in price from the year 1999 till now.
The demand elasticity also has its own determinants, that determines if the good is price elastic or not. There are many determinants here are a few that are taking into consideration a lot. They are: the availability of substitutes, necessities over luxury, definition in the market. In this case gas price is going up and it s not going down but the demand keeps on rising because it is a necessity for people where public transportation is not that well off. The oil price will keep going up and the consumers will keep buying without any kind of question. According to the article What Happened to Oil Price Elasticity by Andrew Mckillop, it is mentioning that people still demand oil a lot even with the high oil prices. But the theory that tends to come up as a question is that when consumer decides to turn to an energy efficient source it will to late. It is also said that even if the consumer cut their demands for oil short, it will affect the industrial sectors. It will affect them because they depend on oil-intensive raw materials. With this happening consumers will leave a crater in the marke ...