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The Blackout of 2003 may increase gasoline prices
Subject Increase in gasoline prices
Topic Supply and Demand
Key Words Price, Reduction in Supply, Increase in Demand
News Story

During the recent blackout across Ohio, Canada, and New York, seven gasoline refineries went offline, and were slow in getting back online, a process that can take up to 2 days. This simply adds to already short supply of gasoline during the late summer, a period marked by extremely high demand. The director of the Federal Energy Information Administration's petroleum division expects that the blackout problem alone could add several cents to the price of a gallon of gasoline. Gasoline prices for September delivery increased by $0.05 on the New York Mercantile Exchange, indicating the perception that gas prices will be increasing over time.

(Updated September 10, 2003)

Questions
1.

Using a graph of supply and demand, indicate the impact of the blackout on the price and quantity of gasoline.

2. During the blackout, many gasoline pumps were inoperable (since they operate electrically). What happened to the interim price of gasoline at the few pumps that were still operated around the Midwest? Use a graph of supply and demand to support your answer.
Source Russell Gold. "Blackout May Raise Gasoline Prices." The Wall Street Journal. August 18, 2003.

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