(Supply and Demand) How do you think each of the following affected the world price of oil? (Use basic supply and demand analysis.)

a. Tax credits were offered for expenditures on home insulation.

b. The Alaskan oil pipeline was completed.

c. The ceiling on the price of oil was removed.

d. Oil was discovered in Mexico and the North Sea.

e. Sport utility vehicles and minivans became popular.

f. The use of nuclear power decreased.

Think about whether each event increases or decreases supply or demand for oil and you should be able to figure out the effect upon the price of oil. I'll be happy to critique your thinking, but am quite sure able to do figure this out.

(Supply and Demand) How do you think each of the following affected the world price of oil? (Use basic supply and demand analysis.)

a. Tax credits were offered for expenditures on home insulation.

(decrease demand and decrease price)

b. The Alaskan oil pipeline was completed.

(increase the supply and decrease price)

c. The ceiling on the price of oil was removed.

(decrease)

d. Oil was discovered in Mexico and the North Sea.

(decrease)

e. Sport utility vehicles and minivans became popular. (increase demand and increas price)

(increase)

f. The use of nuclear power decreased.

(increase demand and increase price)

a. Tax credits were offered for expenditures on home insulation.

This event would decrease the demand for oil. By offering tax credits for home insulation, it becomes more affordable for people to insulate their homes, leading to decreased energy consumption and lower reliance on oil. As a result, the demand for oil decreases, leading to a decrease in the world price of oil.

b. The Alaskan oil pipeline was completed.

The completion of the Alaskan oil pipeline would increase the supply of oil. With the pipeline in place, it becomes easier to transport and distribute oil from Alaska to the rest of the world, increasing the overall supply. As a result of the increased supply, the world price of oil would decrease.

c. The ceiling on the price of oil was removed.

Removing the price ceiling on oil would allow the price to increase. A price ceiling is a government-imposed limit on how high the price of a good can be. By removing the ceiling, it allows the price of oil to rise and reach a market equilibrium. Therefore, the removal of the ceiling would result in an increase in the price of oil.

d. Oil was discovered in Mexico and the North Sea.

The discovery of oil in Mexico and the North Sea would increase the supply of oil. With the new oil reserves, there is more oil available in the market, leading to an increase in supply. As a result, the price of oil would decrease due to the increased supply.

e. Sport utility vehicles and minivans became popular.

The popularity of sport utility vehicles and minivans would increase the demand for oil. These types of vehicles tend to have lower fuel efficiency compared to smaller cars, leading to increased fuel consumption. As a result, the demand for oil would increase, leading to an increase in the world price of oil.

f. The use of nuclear power decreased.

The decrease in the use of nuclear power would increase the demand for oil. Nuclear power is an alternative energy source to oil, so if its use decreases, there would be a greater reliance on oil for energy generation. As a result, the demand for oil would increase, leading to an increase in the world price of oil.

a. Tax credits were offered for expenditures on home insulation: This would decrease the demand for oil because home insulation would make houses more energy efficient, reducing the need for heating oil. As a result, the decrease in demand would lead to a decrease in the price of oil.

b. The Alaskan oil pipeline was completed: This would increase the supply of oil because it would allow for easier transportation of oil from Alaska. With more oil available in the market, the increased supply would lead to a decrease in the price of oil.

c. The ceiling on the price of oil was removed: If the ceiling on the price of oil was removed, it would lead to a decrease in regulation and potentially allow the price of oil to rise. This would be due to a combination of increased demand as well as the potential for oil producers to increase prices.

d. Oil was discovered in Mexico and the North Sea: The discovery of oil in Mexico and the North Sea would increase the supply of oil as new sources become available. The increase in supply would lead to a decrease in the price of oil.

e. Sport utility vehicles and minivans became popular: The increased popularity of SUVs and minivans would increase the demand for oil because these vehicles tend to have lower fuel efficiency compared to smaller cars. The increase in demand would lead to an increase in the price of oil.

f. The use of nuclear power decreased: If the use of nuclear power decreased, it would lead to an increased reliance on other sources of energy, such as oil. This increase in demand for oil would lead to an increase in the price of oil.