Microeconomic Policy Essay Example for Free

microeconomic Policy EssayThe article identifies the major reasons why oil prices have become proud and leave alone remain high. Lynn West illume, chief economist for Tesoro (TSO), suggests that the append in the cost of crude per barrel leads to an increase in the prices of petrololine. The chief economist also suggests that the cost of investment for a new refinery would be at to the lowest degree $16 billion and would depend on several factors like pollution falsify, the cost of human labor, and the nutrition cost for the refineries. Moreover, the huge increase in global consumption levels has led to an increase in consumer posit and a lengthy process of extracting and refining of crude oil. In essence, the article conveys that the pending situation of high gasoline prices will not be resolved overnight and that the existing social conditions especially the front line of legal sanctions and proscriptions will suppress the possibility of maintaining the status quo or of lowering todays dizzying oil prices.Primary economic Elements Mechanical enthusiasm scaling from simple lawn mowers to complex factory engines, as well as the fashion for travelling and other interests of the like has thoroughly mounted the demand for gas. Given with such instances, the production of gas has been failing to meet that demand, so the anticipated and foreseeable price ceiling is not able to fulfill the ideal economic state of equilibrium.According to the analysis discussed in the article, it is evident that the catastrophically-triggered instances in the past hardly a(prenominal) years have gravely affected the circulation of natural resources and minerals. The statement given by the chief of Tesoro familiarity (a company engaging in marketing and refining petroleum products in the United States) that the rapid increase of gas prices, ranging from a shoot up of over $3. 20/gallon, commenced the problem which is now taking item in the bena of gas production. Moreover, the fact that consumers have spent approximately $20 billion in this year alone, making the parallel cost of crude somewhere surrounded by $30 and $70, is a expression that production has depleted at the rate of 2. 5 refineries every two years. Because of the disproportionate rise and fall of demand and supply, the problem is burdening contemporary consumers. Hence, the predicted remedy for such an imbalance in the economic symmetry is interpreted from the idea of the construction of new refineries.However, constructing new refineries is rather costly in terms of materials, labor, and time. Gas companies argon reluctant to submit such risks. As for recent analysis of supply and demand, analysts have suggested that there argon still 150 grades of gasoline fit enough for use in various states. However, the fear of runway down the supply by using these grades is legitimate since refineries need the precise ratio to continue operation. importation more oil only increases the problem because of the 13% tax on importation. ConclusionPrices on fuel outrageously mount, while the production of supply is belligerently met. It is evident that there is an economic imbalance. the government should look to economic stability to assuage societys fear of a scarcity of resources. However, that scarcity will most believably occur. Such scarcity will lead to poverty (Why Gas Prices Will Stay High, 2007). therefore, the government should take action as soon as possible. Economic stability depends on a balance between production and consumption they should increase and decrease in proportion.What one takes, one must sustain. With that equilibrium, there will still be more for the future. Another issue in this mix is the sustainability of resources. Numerous government agencies are now focusing on the environment and on natural threats that are beyond human control (McPhee) in an effort to determine the appropriate amount for the restoration of lost or damaged pr operties, specifically when it comes to mineral resources destroyed by natural catastrophes.The change of the price of oil is dependent upon the trade specifications or laws stated in a states contract on import and export. Its primary goal is to stabilize the transpose of goods or energy for the benefit of the benefactor. The changes also depend on the providers ability to produce. The less a resource is available, the higher its cost in the market.