A Surplus Drives Prices Down At a price of $50 there is a surplus of oil. When there is a surplus, sellers have an incentive to decrease their price and buyers have an incentive to offer lower prices. The price decreases until at $30 the quantity demanded equals the quantity supplied and there is no longer an incentive for price to fall.
A Shortage Drives Prices Up At a price of $15 there is a shortage of oil. When there is a shortage, sellers have an incentive to increase the price and buyers have an incentive to offer higher prices. The price increases until at $30 the quantity supplied equals the quantity demanded and there is no longer an incentive for the price to rise.
A Shortage Drives Prices Up At a price of $15 there is a shortage of oil. When there is a shortage, sellers have an incentive to increase the price and buyers have an incentive to offer higher prices. The price increases until at $30 the quantity supplied equals the quantity demanded and there is no longer an incentive for the price to rise.