For example, Mexico has promised to increase oil exports. Norway may follow suit. OPEC refuses to accept the blame for high oil prices. It states that the price of crude is only 30 percent of the pump price in the U.S. Taxes and new environmental regulations on gas blends in some areas bear some responsibility. Oil prices have tripled.
Western governments are concerned.
Using a supply and demand diagram, show how higher oil prices can cause lower economic growth and higher inflation. Explain what you have drawn. Draw a supply and demand diagram of the market for gasoline. OPEC and non-OPEC countries promise to increase their sales of crude oil. Show how this will affect the equilibrium price and quantity of crude oil.