Rising Energy Costs and Rising Inflation in Antarctica - Case Study Example

The effect presented on the prices of commodities within the economy would increase due to the need to find alternative energy sources. Most producers would find the need to increase their supply because of the opportunity presented in alternative energy investment. The location of Antarctica makes the search for a wider selection of energy sources tasking hence the shift would rely on alternative suppliers (Vicuna 289). Oil producers would benefit from the scenario because Antarctica offers minimal options for the extraction of oil reserve and external supply, to be increased would benefit the suppliers as compared to consumers.

The fluctuating market structure threatens to increase SRAS that is beneficial to the producers and suppliers as compared to the consumers, who would be presented with minimal opportunity to control the market prices.  Increased oil prices effects on consumers Oil is a chief source of energy in a given economy hence is applied within the production industry to maintain the supply and demand at a manageable level. With increased oil prices, the economy is affected to lead to inflation and elevated price of living.

The presentation is placed on the desire for Antarctica to find alternative sources of energy that support industrial production. He increased import prices are presented to the country’s economy that would be imposed on consumers. With inflation, the consumption level is reduced with an increased cost of living. Therefore, consumers would opt for alternative sources of energy and alternative commodities whose prices are affordable (Mackenzie). The consumption pattern would be affected because the demand for products in the market would decline.

Increased oil prices not only affect the production industry but also affect the transportation sector. These areas are the avenues used by producers to supply goods and present the channels that deliver service presentation to the market. With increased oil prices, the suppliers would increase their value to the service delivered to offer inflation to the market structure. Inflation presents a negative effect on consumption trend. How Inflation affects consumers The cost of goods and services within the Antarctica economy would affect the demand for goods.

Inflation is caused by the desire to cover costs incurred during the production process before the services are directed to the consumers. With increased prices of products within the economy, the import level would be increased to cover the costs that help generate profit. The demand for more services and products within the market prompts producers and suppliers to increase their prices with the realization that the commodity would be scarce within the economy. The money value is decreased because there are increased prices within the market and the consumers pay the price to acquire the services needed.

The increased prices present challenges to the consumer with increased living cost and income remaining constant. Consumers are presented with minimal opportunity to choose alternative products with the demand increased in energy sources within the restricted economy. The increasing price of oil and inflation Inflation increases the cost of living by a significant amount and makes it tasking to cope with the price changes found within the economy. This is caused by the elevated demand for the energy sources within the economy and threat placed on the minimal option placed on alternative energy sources.

Increased oil prices within Antarctica would destabilize the production and transport industry with oil as the leading source of energy (Cooper). Therefore, producers would strive to increase the product prices to cover extra costs incurred in the attempt to satisfy the growing demand for energy within the economy. Inflation is depended on the willingness of the consumer to require energy source within the economy. Increasing oil price would be reflected on the consumption with the minimal alternative offered to counter the prices.

The need to stabilize production and supply for oil with the increased prices is reflected in the prices subjected to consumers. Effect of Oil prices on a) Price-Level Increased the international and local supply of oil is reflected on the economy to cover costs incurred in production and extraction of the energy source (Cooper). With increased oil prices, the price level is elevated because inflation is the norm presented in the market to sustain the economy. The consumers have to pay the price to maintain production and supply level. b) Quantity of RGDP Increased oil prices would reduce the real Gross domestic product level due to the increased inflation rate.

The output would be invested to stabilizing the economy to sustain consumers. With the reduced supply of resources, there is the need to maintain the available energy and utilize the amount in production (Machenzie). c) Underemployment The rate of employment is directly dependent on the energy produced within an economy. With the reduced supply of energy, the employment industry is affected due to reduced supply of energy for production, transportation and profit generation. The rate of underemployment would be increased with a destabilized economy.