Demand vs quantity demanded

From Environmental Capital:

Ana Campoy in the WSJ reports that American drivers are getting even more skittish about getting behind the wheel: Gasoline demand fell more than 3% in early July compared to last year, after dips of 2% in June and 1% in April. Gasoline consumption over the Fourth of July weekend hadn’t been so low since 2003, all because average gasoline prices are now at $4.10 a gallon.

Americans hope market economics will work—as demand falls, the hope is that crude oil and gasoline prices fall, too. Gasoline stocks are accumulating, even as refiners are moderating supply. Analysts have no worries there will be plenty of gasoline this summer. Some analysts see a light at the end of the crude-oil tunnel.

According to the first paragraph, as prices rise gasoline consumption has fallen which is a movement along a single demand curve. Looking at the graph to the right, suppose that world oil/gas demand increases from D1 to D2 (e.g., as a result of economic growth in China). As price rises from point c to b, quantity demanded in the U.S. falls from c to a.

The second paragraph may be confusing a movement to the northwest along the demand curve (as I've drawn it) and a shift to the left of the demand curve:

Americans hope market economics will work—as demand falls, the hope is that crude oil and gasoline prices fall, too.

At this point I would usually rant that demand hasn't change (D1 hasn't shifted left) but only quantity demanded has changed (point c to point a). But the rest of the paragraph has me wondering:

Gasoline stocks are accumulating, even as refiners are moderating supply. Analysts have no worries there will be plenty of gasoline this summer. Some analysts see a light at the end of the crude-oil tunnel.

Does this mean that a surplus has developed at $4 per gallon? A surplus will result if we are moving into the long run. Enough people have retired their SUVs, switched to public transportation, car pools and bikes for us to be on a new short run demand curve to the left of the original (D1 above). If so, the new behavior will lead to a decrease in price.

For a more thorough analysis of the difference between demand and quantity demanded, and the movement into the long run, see our newest ECON 101 page titled (surprise): Demand vs quantity demanded.

Comments

[James McCarthy]

I, the seller, want $100 in revenues.
I'll sell you 10 gallons at $10 per gallon.
You only want 5 gallons, okay $20 per gallon.
You only want 1 gallon, okay $100 per gallon.
Until an alternative is available or the goose dies.

[Ironman]

Hi James!

I run the gas station just a bit down the street from you. I sell my gas for just a few cents per gallon over the spot cost of replacing each gallon sold. Let me know how your business plan works out for you!

[Daniel Hall]

Is D1 world oil/gas demand at the beginning or US oil/gas demand at the end?

And yes, it can be both. But then you have some other 'splainin to do.