Green technology: Accelerating a sustainable transportation system

Based on the New Strait times  newspaper article title Green technology: Accelerating a sustainable transportation system  ,17 July 2012  . Civilization in this world develops step by step to make a better living in this world.  The introduce and the evidence of wheeled vehicles appears from the mid-4th millennium BC, in Mesopotamia , brought a lot of impact to this 21^st century era. Manufacturer creates transportation such as cars , bus , or motorcycle that helps us to travel more easier and convenient to place or destination we need to go. Without gas or petroleum , the transportation can’t be operate or we can call the backbone of the transportation. This is because petroleum or gasoline generates energy for the car to move since nowadays majority of it uses the energy source of fossil fuel that is non renewable rather than renewable energies such as solar or wind.  In the article I refer to, there’s factor that  I can apply in the microeconomics term .

      The price of the of the petroleum or gasoline is mainly due to the demand and supply factor.When the supply is low, the demand will be high. Mostly all average adult population in the world use car to travel.  Furthermore population growth rate increase every month in each continent in the world thus effects the demand factor and contribute to the lower supply of petroleum.  The graph rate of the petroleum price increase upwardly time by time. Consumer can find other alternatives substitute such as using natural gas (NGV) or more lower quality petroleum such as Ron95 that is Ringgit Malaysia 1.90  rather than Ron 97 that is cost Ringgit Malaysia 3 per litre .We can also call this as opportunity cost. The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action. Scarcity occurs when demand needed is more than the supply provided. This happen when the petroleum supply in the world market is low while the demand is extremely high. In other hand this will also cause price inelastic demand .Eventhough the  price is high but still the consumer buy it because it’s a requirement or necessities not luxury. “One of the most important factors that will enable smooth implementation is putting in place proper infrastructure, especially for charging electric vehicles’ this statement is one way of example of substitute of the petroleum running cars.The introduce of charging electric cars or the rise number of public transportation will have substitution effect  .Substitution effect when the relative price(opportunity cost) of a good or service rises people seek substitutes for it , so the quantity demanded of the good or service decreases. Due to the increase of price of petroleum, consumer who have lower income will occur income effect. They will turn to public transport perhaps. Income effect when the price of a good or service rises relative to income, people cannot afford all the things  they previously bought, so the quantity demanded of the good or service decreases. We can also relate to the demand of preferences’. People with the same income have different demands if they have different preferences. In example, people with higher income will use more expensive price of petroleum like Ron 97 while the lower income consumer will use Ron 95 as their daily preferences.  ‘There is no doubt that green transportation can reduce the overall consumption of petroleum and diesel in the country’. This statement clearly shows the factors of a change in demand because substitute is introduced .The populations demand depends on the size and the age structure of the populations. The larger populations the larger is the demand for all gasoline whereas the smaller the populations that are requiring for the use of gasoline, the lesser demand is required. In city center such Kuala Lumpur which is more population,the demand is higher compare to in suburban such as Kelantan that has lower population rate.

      ‘The transportation sector is also closely linked to the fuel subsidy. Improvements in fuel efficiency will lead to reducing the economic burden of the fuel subsidy.”   We can apply this in lecture 4 production subsidies. Government introduce this to ease the burden to the public by reducing the actual price of ,the petroleum. Subsidies means a grant or contribution of money. Government of Malaysia subsidies totalling Rm17bil on petroleum-related products have been allocated for next year 2013 to help reduce the rising cost of living . With no subsidy the price is higher than RM 1.90 for Ron 95. Subsidies also been implement in daily necessities such as sugar, chicken and many more. With subsidy the marginal cost of supply will falls.Externalities is an effect of a purchase or use decision by one set of parties on others who did not have a choice and whose interests were not taken into account. ‘A sustainable solution: While the government has a constant finger on improving the public transportation system, carbon emissions and climate change are issues too big to be ignored even for a moment’  . The relation is negative externalities and positive externalities. The cons externalities is when the usage of petroleum increases world wide , therefore creates bad effect to the environment such as global warming and carbon emission. ‘There is constant talk about the increasing numbers of vehicles on the road, and the subsequent pollution they create.’ Global warming can rises the earth temperature and cause negative to the health and environment. ‘Creating a well-connected capital city and improving connections across the country is one solution to this problem. Another is green transportation.’Positive externalities is when the government introduce the electric charging cars and improving the public transportation system, which improve the situation.

      In conclusion , the law of demand , the law supply, the law of demand and supply  is playing a major part in contributing to the world economy situation in petroleum . The petroleum situation will never reach equilibrium point between the demand and supply curve if there’s no step taken by the government and the oil company , this will cause a big economic problem among the world nation to solve this inefficient problem.
   

Affan