Question

Drawing on your knowledge of the theory of demand and supply – supplemented by appropriate media reports – explain what has been happening to the price of gas in Australia over the last ten years. with relevant graphs and around 2500 words

Answer 1

Ans) The prices of gas in australia, have seen a gradual increase since the last recession in 2008. As per the Australian Institute of Petroleum, recently the petrol prices in Australia on an average, touched a sky high $1.60/litre. The major reasons behind such an increase over the years, is mainly because of the strangling supplies by major companies in the gas industry along with higher levels of investment volatility internationally and in the recent times mainly because of the the increasing trade war between the US and China.

Apart from this, there has been a reduction in the production of oils and gases, by the oil cartel OPEC and Russia. Although they have agreed and expressed their desire to increase the level of production, there have been serious negative outcomes in the production levels in the other countries. Along with the constant decrease in the production levels all over the world, the trade sanctions on Iran worsened the production problem, which led to a decrease of about one million barrels every day, all over the globe along with the deteriorating economy of one of the major oil producer of the world, Venezuela. Because of all this the oil prices rose to almost $US87 a barrel recently.

As per the recent studies and according to the comments of certain experts, and it quite noticable that the increasing prices was, being kept high mainly because of the battle taking place between the major petrol retailers; Coles Express and the Viva Energy over price determination. Also, the Coles now, is providing one of the most expensive fuel in the Austalia.

In Sydney in the recent times prices hit an average of $1.65 per litre, whereas in Melbourne consumers had to spend around $1.66 a litre. The increasing costs has had a very bad effect on the consumers and middle class families. As per the recent developments, commercial opportunities are round the corner to extract the gases without casuing a harm to the farmland or the water necessary, thus the ban on exploration could be lifted anytime after June 2020, enabling the commencement of exploration.

Apart from above mentioned details, electricity and gas prices have increased considerably in the previous years and as per the recent studies we will be able to some more increase in the prices. The fundamental reason behind the constant increase, are different for each type of gases and power and oil.