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Demand Sulpply Case Study

Hurricane Sandy caused major problems with the supply and demand of gasoline in New York and New Jersey. The storm damaged infrastructure, blocking roads and power outages that interrupted the supply chain. This caused many gas stations to run out of fuel. Though demand remained the same, the supply curve shifted left, creating a shortage at the original price. The price was forced to rise to P2 to clear the market, though customers were unwilling to pay the higher price due to the unexpected circumstances created by the hurricane.

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98 views10 pages

Demand Sulpply Case Study

Hurricane Sandy caused major problems with the supply and demand of gasoline in New York and New Jersey. The storm damaged infrastructure, blocking roads and power outages that interrupted the supply chain. This caused many gas stations to run out of fuel. Though demand remained the same, the supply curve shifted left, creating a shortage at the original price. The price was forced to rise to P2 to clear the market, though customers were unwilling to pay the higher price due to the unexpected circumstances created by the hurricane.

Uploaded by

anu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Hurricane Sandy Case St

udy
Objective – Supply, Demand and Equilibrium
Introduction
1 Background to understand the Hurricane Sandy in detail

Problem Statement
2 What Problems Hurricane Sandy Created

Solution
3 ABC

4 Conclusion
Facts
Introducing Hurricane Sandy
Hurricane Sandy was the deadliest, most destructive, and strongest hurricane of
the 2012 Atlantic hurricane season. The storm inflicted nearly $70 billion in
damage and killed 233 people across eight countries from the Caribbean to
Canada
1.1 Hurricane Sandy Fast Facts
1 2 3 4

2 2 2 2

Hurricane Sandy was the


Hurricane Sandy was the At it’s worst, the winds of Hurricane Sandy cost the USA
largest Atlantic storm ever
recorded most deadly hurricane to Hurricane Sandy reached around $75 billion.
hit the US since  115mph.
Hurricane Katrina in 2005

5 6

2 2

Flights were cancelled In the USA, schools and


public buildings along the
East coast were closed
1.2 Hurricane Sandy Fast Facts
After Hurricane Sandy
demand has been increased
for gasoline
HURRICANE SANDY interrupted gas supplies,
resulting in many stations around the city
shutting down when their supplies ran out
New Yorkers became increasingly
desperate to get hold of gas for a
variety of reasons: to commute to
work, to power generators for those
who have lost power and many more
reasons
New York and New Jersey both have laws
prohibiting price gouging, but as the shortage
stretched on gas was being sold on Craigslist at
many times its pre-hurricane price.

Essentially the government response to the


gas shortage created a black market.
2.1 Hurricane Sandy Problem Statement
As stated earlier that the problem of gas supply and demand was due
to the interruption in the supply chain caused by superstorm sandy.

Superstorm sandy caused multiple obstructions for gas to be supplied


effortlessly like that in the pre- hurricane period i.e., roads were
blocked for fresh supply to be transported to the gas stations, gas
stations were out of power even if they had gas underground and
many gas station were out of the gas altogether.

Taking pre-hurricane period into consideration, let us consider the


demand of the gas to be represented on the demand curve (DD) and
supply of gas to be represented on the supply curve (SS). Two curves
(i.e. demand curve and supply curve) represent the relationship
between the price and quantity of gas keeping everything else
constant. Point E, represents the equilibrium where demand curve
(DD) and supply curve (SS) intersect each other. At point E, consumers
are ready to pay price (P1) for consuming quantity of (Q1) of gas.
2.1 Hurricane Sandy Problem Statement
But after HURRICANE SANDY struck cities of New York and New Jersey,
due to the interruption in supply chain of gas, there was shortage in
supply of gas.

Although demand remains the same but due to the above-mentioned


reason, there is a movement in the supply curve from S1 to S2 as shown
in the figure 2 which creates a situation of excess demand or supply
shortfall. Shortfall represents or is created when buyers demand more
of a product or service at a given price that producers are willing to or
are able to supply. This forces the price to rise to P2 at which QD2
represents the demand of quantity by consumers and QS2 represents
the supply of gas at current state.

Note: The current situation is not of an equilibrium as customers are not


willing to admit to a higher price but are forced to due to unpredicted
circumstances.
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Conclusion
1 2 3 4
Thank you..!!

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