The Increase of The Supply and Demand Gap of The Gas

            Demand is something that related to what you want, can you afford it or not and do you plan to buy it or notby measured an amoun per unit of time. Demand also reflects to our decision about which we want to satisfy. The quantity demanded of a good or service is the amount that consumer plan to buy during the period at the particular price but it is not necessarily as the sam as the quantity that you actually bought. When the quantity demanded exceeds the amount of goods are available, so the quantity bought is less than the quantity of demanded.

          The factor that influence someone for buying plans is the price. The relationship between the quantity demanded and the price can be known by the law of demand. The law of demand states that when the price is getting higher, the quantity demanded is getting smaller. But when the price is getting lower, the quantity demanded is getting greater.

            According to the law of demand, there are two reasons about a higher price can reduce the quantity demanded which are the substitution effect and the income effect. Substitution effect happens if the price is rises when the other things are stable so the opportunity cost or the relative price also rises. A substitute good can be use in its place as the opportunity cost of a good rises although each of the goods are unique.

                Supply is related to having more resources and technology to produce something and they are the constraints that limit what is possible. Supply also reflects to a decision about which technologically feasible item to produce. The quantity supplied of goods and services is an amount that producers plan to sell during a period at the particular price but it is not necessarily the same amount as the quantity actually sold.

                The law of supply said that the higher price of good the quantity supplied becomes greater when another things remaining the same but the lower price of good, the quantity supplied become smaller. As the result for the law of supply, the general tendency for marginal cost of producing is to increase as the quantity produced increase and producers are willing to supply a good only if they can at least cover their marginal cost of production.

                Equilibrium is a situation in which opposing forces to balance the demand and supply curve. An equilibrium price is the equal price of the quantity demanded and the quantity supplied. The equilibrium quantity is the quantity bought and sold at the equilibrium price.

            According to Datuk Dr Abdul Rahim Hashim, Malaysia's gas supply-demand gap will start growing next year at the time whereby contracted production declines, and Malaysia faced supply challenges with declining indigenous gas production in Peninsula Malaysia, increased extraction rates, commercially challenging reserves.

            As the demand and supply of the gas grows, it will make the cost of production and exploration become higher than before and it will effect to the market equilibrium price that will be given to the public to consume the gas. When the price is increase, the consumers do not buy it and it becomes a production surplus. Beside that the demand of energy also increases along the amount of the population which grows higher than before and that makes a shortage happen.

            When the amount of the population getting higher and their income still remain the same, it becomes a problem for them at where they cannot afford the gas for their daily use. The shortage that happened will make extinct for the gas to be consumed for the public. The effects of gas’ extinct are the distributor will face loss or bankrupt, and the restaurant owner will be forced to close their business.

            As the demand of the gas and the surplus of the gas have increased, the equilibrium price becomes uncertain because the increase in demand raises the equilibrium price and the increase in supply lowers it. But if once the demand and supply of the gas have decreased, the equilibrium price becomes uncertain because the decrease in demand lowers the equilibrium price and the decrease in supply raises it.

            Datuk Dr Abdul Rahim Hashim also said that within South-East Asia, end-user gas prices in Malaysia are the lowest, given the heavy subsidies which kicked in over 15 years ago, in 1997 and according to Abdul Rahim, Malaysia currently ranked 15th in terms of gas reserves and 21st in terms of oil reserves and they need to balance the nation's dynamic economic and socio-political interest and this must be done as to ensure security of gas supply.

            Malaysia becomes the lowest user of gas because the subsidies that the government gives, make the gas’ price become higher and they become a burden for 15 years and in this 15 years, their income is not increase and they cannot afford to buy the gas for their daily needs.

            In this case, the government should not make the price of gas above the average income of public, it will effect their living expense in any matters. The government should find another sources that have the same function for the gas substitution so that there will be no shortage among the people who use the gas and government should make sure the capacity for each people are fair based on their needs when using the gas.

            The government also needs to increase the reserve for the gas and the oil so that Malaysia can be in the higher rank than before. If the government increases the reserve of the oil and gas, citizens will have good supply of the oil and gas and the market equilibrium price will go back to the normal price and there will be no shortage or surplus in both the users and the producers to use or produce the gas and oil.

Original article link: http://biz.thestar.com.my/news/story.asp?file=/2012/5/9/business/11255164

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