2010-11-27, 05:41 AM
rayhovite Wrote:An increase in supply would result in a surplus if the price doesn't change, but it does. It would cause a downward pressure if demand drops as a result, bringing the price back to the original equilibrium. But what if demand remains constant, such as the oil industry?
According to MacGraw Hill, gasoline prices have flcutuated sharply over the last half-century. Reductions in demand from new energy-saving technologies led to the long decline in price after 1980. If you're talking about the last decade, then yes, rapid growth in the world demand for oil relative to supply produced steeply growing price trends.