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The Rise of Fuel in Australia

analytical Essay
1204 words
1204 words
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1.0 Article Summary The Australian Broadcasting Corporation’s (ABC) news article titled, “Petrol price soars, more pain at the pump ahead,” discusses the rise in the price of fuel and its effect on Australian motorists. This article also discusses how this rise in the price of fuel occurred, mainly focusing on its effect on consumers (Janda 2014). 2.0 Introduction The cost of fuel had risen by 6 cents to 158.1 cents in the week of January 5, which is quite a fast rise in price. It was reported by CommSec to be the fastest increase in fuel price records since 2004. The price of unleaded petrol as set by Singapore is the primary benchmark of petrol pricing in Australia (Bureau of Resource & Energy Economics 2014). The main reason why the price of fuel has risen is due to the fact that the Australia dollar has been depreciating and gasoline prices in Singapore have been rising. Since fuel is regarded as a necessity, the increase of fuel prices would have a certain impact on the Australian economy. This will have an effect on a variety of economic aspects which include; demand and supply, elasticity, market equilibrium and disposable income. The goal of this analysis is to discuss the effect that the rise in petrol, holding all things constant (Ceteris Paribus), will have on the Australian economy. 3.0 Analysis 3.1 Demand & Supply In economics, particularly microeconomics, demand and supply are defined as, “an economic model of price determination in a market” (Ronald 2010). The price of petrol in Australia is rising, but the demand remains the same, due to the fact that fuel is a necessity. As price rises to higher levels, demand would continue to increase, even if the supply may fall. Singapore is identified as a primary supplier ... ... middle of paper ... ... to purchase petrol despite its cost. To make a positive note, it is notable that an increase in prices of fuel would increase the nation’s opportunity cost. 4.0 Conclusions To conclude this analysis, it can be noted that any increases in the prices of fuel will increase Australia’s economy as a whole, in other words the higher the costs of logistics will increase the price of products (Australian Competition & Consumer Commission 2014). The consumers will have to handle the burden of having higher costs of products, which would create an inflation. With the increasing price of fuel, consumers might want to alter their lifestyles, such as using public transportation or even carpooling. Vacations and travelling will also have to be cut down. Australia requires further government intervention to control the price of fuel by subsidizing so that inflation may be curbed.

In this essay, the author

  • Analyzes how the australian broadcasting corporation's (abc) news article titled, "petrol price soars, more pain at the pump ahead," discusses the rise in the price of fuel and its effect on australian motorists.
  • Explains that the increase in fuel prices puts a brand new affliction on consumers, since the increased fuel’s price will move into disposable income with greater effects, lowering the consumer’ s buying power.
  • Concludes that any increases in the prices of fuel will increase australia's economy as a whole, and consumers will have to handle the burden of having higher costs of products, which would create an inflation.
  • Explains that the price of unleaded petrol in singapore is the primary benchmark of petrol pricing in australia. since fuel is regarded as a necessity, the increase of fuel prices would have an impact on the australian economy.
  • Analyzes how the law of demand has a negative relationship between the quantity demanded and the price of petrol.
  • Explains that the price of fuel in australia is price inelastic, since changes in price do not alter its demand.
  • Explains that the market equilibrium occurs when the quantity demanded to quantity supplied increases, resulting in a surplus.
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