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Gas Prices Decrease: Economics of Supply & Demand

December 21, 2012

The North Platte Telegraph and others recently have featured articles about lower gas prices sweeping across the state.  This is a textbook example of supply and demand.

The price of a good decreases when the supply is greater than the demand.  The supply of oil is greater than the demand for it; it’s that simple.

Rose White, of AAA Nebraska, attributes part of the decreasing price to the increased production of oil in North Dakota.

If one needed more evidence that the Keystone XL pipeline would be good for the Nebraska economy, here it is.  KXL will not only bring oil from Canada, but also includes oil from Montana and North Dakota.

To put our economics lesson in context: as the supply of oil increases, due to the KXL, greater than the demand, the cost to fill your tank goes down.

Contact Governor Heineman’s office and let him know that we should allow the KXL to be built in Nebraska.

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