2.

0 Discussion on the short run level deviation from the long run
level of domestic petroleum utilization initiated by changes in
autonomous spending due to local fuel consumption
Autonomous spending can be defined as a characteristic of essential products in
which they experience no change in quantity demanded when there is a
corresponding change in the price of these products, Petroleum is one of such
essential product, regardless of changes in fuel price to a certain level, there will be
little change to its demand. it is to an extent a necessity.
When an eventual change in this characteristic of an essential product occurs, there
is bound to be a deviation from the predicted long run utilization of this product.
Consider for example, a neighborhood decides to become more environmentally
aware, they realize all the men work at the same factory and decide rather than
drive separate cars to work, they can form a carpool association, there is therefore a
reduction in the number of cars running that particular route by as much three
quarter of the original number of cars running that route.
In this case, there will be no change in the price of petroleum but a reduction in
domestic petroleum utilization initiated by a reduction in autonomous spending on
petroleum brought about by a reduction in the local fuel consumption.

fig 1.0 Graph showing the short run level of domestic petroleum
utilization initiated by change in autonomous spending due to reduction in
local fuel consumption.

Observation from the graph above

1. The price of petroleum was constant at P1 but the quantity demanded by the
neighborhood dropped from Q1 to Q2, shifting the demand curve downwards.
2. The new demand curve intercepts the supply curve forming a new equilibrium
point with a new price (P2) and with the ideal quantity supplied being Q2.
This graph shows that for a reduction in utilization of petroleum, the ideal supply
target strategy will be to reduce the supply output to match utilization level .
There will a reduction in the price of petroleum encouraged by a decrease in the
local taxation on oil producing countries by oil consuming countries, this is done to
persuade an increase in demand.
Consider an opposite of the previous example, A neighborhood not practicing
carpooling has majority of its men serving as workforce for a factory that has
recently been relocated to a farther location. There will be an increase in fuel
consumption.

fig 2.0 Graph showing the short run level of domestic petroleum
utilization change by an increase in autonomous spending due to increase
in local fuel consumption.

Observation from the graph above

1. There was an increase in petroleum utilization from Q1 to Q2 while the price
remained constant, this caused an upward shift in the demand curve.
2. The new demand curve intercepted the supply curve forming a new equilibrium
point with a new equilibrium price (P2) and equilibrium quantity (Q3).
From this graph we can conclude that an increase in fuel consumption, hence a
change in autonomous spending will result in supply target strategy that increases
output from Q1 to Q3, the output will be less than the utilization level Q2, this will
create an artificial scarcity that will cause petroleum price to go up.
An Ideal local tax strategy will see an increase in the taxation of producing countries
by consuming countries to curb increasing demand and reduce output.

Discussion on the short run level deviation from the long run level
of domestic petroleum utilization initiated by changes in
autonomous Global demand.
Alterations in global demand of petroleum is evident in any individual country as
either a reduction or increase in that particular country's supply output.
The impact of an increase in global demand on a country will see a decrease in the
supply of petroleum to that country.

fig 3.0 Graph showing the short run level of domestic petroleum
utilization change by an increase in autonomous global demand.
Observation from the graph above
1. There was an increase in price from P1 to P2 while the petroleum utilization level
remained constant, this caused an upward shift in the supply curve.
2. The new supply curve intercepted the demand curve forming a new equilibrium
point with a new equilibrium price (P3) and equilibrium quantity (Q2).
From this graph we can conclude that an increase in Global demand will result in
supply target strategy that decreases output from Q1 to Q2, the output will be less
than the initial utilization level Q1. this is ideal to maximize profit due to increasing
prices.
The local tax strategy will see a decrease in the taxation of producing countries by
consuming countries to decrease the fuel price from P2 to P3.
A decrease in global demand of petroleum on the other hand will see the supply to
individual countries increase:

fig 3.0 Graph showing the short run level of domestic petroleum
utilization change by an increase in autonomous global demand.
Observation from the graph above
1. There was an decrease in price from P1 to P2 while the petroleum utilization level
remained constant, this caused an downward shift in the supply curve.
2. The new supply curve intercepted the demand curve forming a new equilibrium
point with a new equilibrium price (P3) and equilibrium quantity (Q2).
From this graph we can conclude that an decrease in Global demand will result in
supply target strategy that increases output from Q1 to Q2, the output will be more
than the initial utilization level Q1. this is because there will be more crude available
for individual countries.
The local tax strategy will see an increase in the taxation of producing countries by
consuming countries causing an increase in the fuel price from P2 to P3