Emily Fok (11)
Fiona Tang(27)
Economics news report
The price of East Harbour Tunnel increases led to the decrease in
demand for gasoline.
The rise of tunnel toll of the East Harbour Tunnel caused a large decrease in quantity
demand for the Tunnel. However, not only numbers of cars, the increased tunnel fee
also influences the price of the gasoline. The price of the gasoline decreased rapidly.
It was found that the habit of Hong Kong drivers has changed, more people drive on
holidays. On the contrary, drive less on weekdays.
This phenomenon happened because of the improvement of railway network and the
high price of gasoline.
Since Tunnel toll increases driving falls. And the drivers used other tunnels (e.g.
Western Harbour Tunnel) as substitutes. Hence there was an decrease in the quantity
demanded for the East Harbour Tunnel. As the supply of tunnel is fixed, the supply is
perfectly inelastic. Hence there will be an excess supply for the tunnel.
Besides, car and gasoline are complements. They need to be used together. Because
people drive less, the demand for gasoline drop. Also because of the high gasoline
price, this also causes people to reduce their demand for cars and decrease their
demand for gasoline.
As a result, because of the rising toll for East Harbour Tunnel fuel price, the demand
for gasoline decreased a lot.