Article Analysis Paper

1278 Words Oct 19th, 2008 6 Pages
Article Analysis Paper
The United States consumes more than 25% of the world’s petroleum products which is a large percentage, considering only 3% of the world’s oil reserves are produced by the United States. Given the demand for petroleum products such as gasoline, understanding why Crude oil prices have skyrocketed in recent years, is not hard. According to the article “Ending America’s Oil Addiction,” the surge in crude oil prices can be reduced in large part to the simple concepts of supply and demand. (Cooper, 2008)
This paper will define terms such as economics, micro economics, the law of supply, the law of demand and the factors which lead to a change in supply and demand. This paper will also summarize the article and
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According to the article the long-term trend in gasoline consumption has four points of interest which are 1973, 1979, 1992, and 2004.
In 1973 the Arab oil embargo occurred which resulted in a slight downward shift of crude oil consumption and in 1979, the year the Iranian revolution occurred, the consumption of crude oil took an even sharper turn downward as prices soared to $.75 per gallon which was a 120% increase. After 1979, consumption continued to grow slowly compared to prior years and gas prices declined. The article suggests that the downward trend in consumption may be due to the passage of the Corporate Average Fuel Economy Standards (CAFE) in 1975. CAFE required automakers to increase the fuel economy of the cars which were being produced. Over the years the CAFE requirements stopped increasing and in 1992 the consumption of gasoline increased drastically and prices remained stable. This trend provided automakers with no incentive to improve the fuel economy of the vehicles which were being produced. In 2004 the consumption of gas stopped its upward trend and flattened out to the point of a very slight decrease, but the demand remained constant. The article suggests that with the constant demand for gas the prices have continued to rise over a longer period, resulting in an increase of over two dollars a gallon since 2002. Such increase represents a 150% increase from the highest price in 2002. (Cooper, 2008)

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