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Modern Economics Q&A Essay

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The gas prices as we know today keep rising due to many variables. It seems every year we all wonder why these prices go up for a while and then hit the lowest price per barrel that we have seen in a long time. I have been driving for about 25 years and remember when you could go and get gas for your car or truck for no more than $1.00 per gallon. Today we see the price per gallon change like the weather. During the winter months the barrels are cheaper and the summer they rise, which it return cost more at the pump. The United States consumes about 20 million barrels of oil products per day (bbl/d), according to the Department of Energy [source: DOE]. Of that, almost half is used for motor gasoline. The rest is used for distillate fuel …show more content…

Today it has leveled out a bit since the farmers are now able to grow more corn and the weather has not affected the crops. Just like the Core Economics book states. A change in supply results in one or more of the determinants of supply; it causes the entire supply curve to shift. One thing that will not move is the change in quantity supplied. The only thing that will change this is the price of the product. In this case it changed all the way around. On May 12, USDA released its first official supply-demand report for the 2007-08 marketing year which begins on September 1, 2007. Two surprises in the report were (1) a 200 million bushel increase in the amount of corn to be processed into ethanol vs. the late February projections used at the annual USDA Outlook Forum and (2) a slightly lower U.S. corn yield than had been anticipated. These developments produced significantly lower August 31, 2008 corn carryover stocks than generally anticipated. Lower projected 2008 stocks helped to temper the negative effect on prices from rapid eastern Corn Belt planting progress in the past 10 days. USDA also reduced its old-crop corn export projections slightly from projections made last month. However, recent export sales and export shipments to date indicate both shipments and sales will need to slow considerably to reach the projections. The chart below shows the demand for corn.

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