Use the laws of supply and demand to explain why the cost to heat our homes and businesses goes up in the winter time?

Question

Use the laws of supply and demand to explain why the cost to heat our homes and businesses goes up in the winter time?

2 Answers

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Answer 1

The cost of heating a home goes up every winter because the greedy energy companies know that's when people are likely to consume more energy. It has little to do with supply and demand in my opinion - that's just what they try to brainwash you with:

"More people need energy, and the less of it there is to go around, the higher the price".

Yes energy is a finite thing, but there's still plenty of resources if we all learn to share. It's the damn corporates that want you to believe energy prices HAVE TO be this way.

Answer 2

The rule of supply and demand states that, changes in either supply, demand or both - will impact market price.

Taking energy costs in winter as an example, each year energy companies have a set reserve of energy to divide among customers.

And the demand for energy is greater in the winter months as the temperature drops. This is where the law of supply and demand comes in:

If demand increases and supply remains unchanged, a shortage occurs, leading to a higher equilibrium price.

So demand is definitely higher in winter, and yet the energy supplies are the same as they were at the beginning of the winter - they are not going to increase.

This will lead to a higher equilibrium price, which translates into higher bills for consumers.