(a)[3]
Using Fig. 1, explain the trend in US net imports of oil after 2005.
(b)[7]
- Using diagram(s), explain how the new sources of crude oil from hydraulic fracturing and the ‘falling enthusiasm for cars among younger Americans’ might be expected to bring about a fall in the price of gasoline (petrol) in the US. [4]
- Suggest and explain one factor that might have caused the price of gasoline (petrol) to rise in the US after 2009 despite these changes. [3]
(c)[4]
Explain the value that you would expect to obtain if you measured the relationship between gasoline (petrol) and biofuel using cross elasticity of demand.
(d)[6]
Discuss how a reduction in dependence on foreign oil might influence aggregate demand in the US economy and what effect this has on prices and employment in the US.