Tui Bus305 Mod 1 Case Study

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Trident University


Module 1 Case Assignment

Competitive Analysis and Business Cycles: BUS305

Dr. Benjamin Yeo



Society is confronted with the ever changing prices of gas and how that effects the cost of our goods and services. It is discussed in the news, legal, and political arenas. When a Hurricane hits the Gulf of Mexico, oil wells must stop drilling that effects the supply of oil, and we immediately see the result at the pump of increased gas prices. What drives a commodities price, supply, demand, or a combination of all three?

How Changes in Supply and Demand Affect Oil Prices

The forces of demand and supply in the marketplace determine the prices of fuel and related oil products. When the demand grows and disruptions in supply occur, pressure automatically pushes the prices and they go high. Whenever there is more people demanding oil products and they are rare, prices always increase; conversely, when the oil products flood the market and demand is low prices decrease since less people are competing for the commodity especially fuel. For this discussion, the demand portion of the equation is the motorists and industries that use the commodity; the supply portion of the equation is the oil itself. (Korin, 2004)

Instances of demand and supply are most common at the service station level. If a retailer's price of gasoline increases, customers go to other suppliers to receive a better price. For example, if a certain service station increases its fuel prices and another service station is still selling fuel at a cheaper price, motorists will go to the cheaper service station since the product is the same but prices are different. In today's economy people will drive a little to save a couple cents per gallon at the pump. The demand and supply of a commodity dictates the prices of products to the consumer. Some retailers will lower its prices with the intention of retaining its customers...