Question
'Jet fuel consumption remains the hardest hit section of the global oil market as passengers avoid air travel as a result of the pandemic and
'Jet fuel consumption remains the hardest hit section of the global oil market as passengers avoid air travel as a result of the pandemic and government travel restrictions.The specific problems of the jet market explain why the price of jet fuel is being hit much harder than the price of standard oil' [Note: By 'being hit much harder' what is meant is that the price is decreasing by more.] (John Kemp, 'Oil market rebound hinges on return of international flights', The Age, 22/9/2020, pp.24-25):
i) Use the demand/supply model to explain how the larger decrease in the price of jet fuel than in the price of standard oil could be explained by different sizes of decrease in demand. Is your explanation consistent with information in the newspaper article excerpt above?
ii) Can you think of another possible explanation - using the demand/supply model - for why there has been a larger decrease in the price of jet fuel than standard oil?
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