"Effects of Price Fluctuation of Petrol in UKand possible ways to deal with itContentsIntroduction: .................................................................................................................................... 3Economic Problem of Scarcity due to fall in Price of Petrol: ......................................................... 3Demand side factors that influences the price fluctuation of the Petroleum: ............................. 8Supply Side Factors: ................................................................................................................. 11Government’s action towards the high consumption of Petrol including such externalities: ....... 12Introducing other substitutes of Petrol: ..................................................................................... 13Increase the intensity of using Public Transport rather than private Transport: ....................... 14Increase the use of Renewable Resources: ............................................................................... 14Reduction in dependency: ......................................................................................................... 15Increase the use of different type of Vehicles: .......................................................................... 15Preserve Stocks for Future: ....................................................................................................... 16Traffic Jam: ............................................................................................................................... 16Conclusion: ............................................................................................................................... 16References ..................................................................................................................................... 18 2 Introduction:The recent fall in price of Petrol in UK, influences the economy of the country screamingly aswell as the fall in oil price has affected the world economy extensively. The OPEC member hasreacted on the price fall in Petrol by not supporting the phenomena. The past scenario shows thatthe global economy was exhausted due to not controlling the excess use of Petrol(Great Britain,2012). The fall in price will influence the consumer to consume more. Declining Petrol price hasplayed an important role in the world economy(Noreng, 2006).The demand and the supply of the Petrol has been influenced screamingly due to this fall inPetroliam price. Not only this has affected the demand of petrol but also it has influenced someother factors related to the Petrol. This research study is seeking to assess the effects of the fall inprice of petrol in the UK market(Great Britain, 2012).Economic Problem of Scarcity due to fall in Price of Petrol:From the ancient theory of the demand and the supply, it is very common that the fall in price ofa commodity helps to increase the demand of that particular commodity when the other factorsare remaining constant(Gupta, 2004). The reality is highly associated with this economic theory.The demand and supply of petrol has affected by the fall in price and has influenced some otherrelevant factors related to the commodity. The decline in price due to weak level of demand of acommodity reveals that the economic position of the country is worsening. Several literature hasbeen reviewed to analyse the situation.3 Chart: 1, Source: (Oil Price Analysis, 2014) The above diagram depicts the relationship among the supply, price and demand for the Oilsince 1994 to November 2014(Oil Price Analysis, 2014).The exhaustible resource economicstructure explains that in equilibrium situation, the clear price of the exhaustible resourceselaborated by the change between the market price of the Petrol and marginal cost of removalhave to increase at the similar rate with that of the interest rates. The name of this mechanism isHoteling rule where the assumption has been taken that the exhaustible resources (petroleum) areretained by one specific firm and it thus has the curtail power of extraction (Komalirani &Gaurav, 2013).The price of the Petrol is elastic in nature from the viewpoint of the fluctuation of the price ofcommodity. The demand of the Petrol always stays highespecially in the developed countryit is4 "