Answer to Question #69012 in Economics for Joshua Ng

Question

Suppose war broke out in the Middle East and gasoline and diesel fuel prices began rising. Jeepney drivers and bus owners feared future oil shortages if war cut off the flow of oil, and they rushed to fill up their fuel tanks. In this case, as the price fuel increased, jeepney drivers and bus owners bought more, not less. Is this an exception to the law of demand? Use the terminology of the demand and supply model to explain your answer.

Answer 1

Described rise in fuel demand was short-term.
However, as pre-purchased fuel will be consumed soon, drivers will need to buy other portions. And in this case, according to dependences between demand and supply, petrol sales are expected to decline.
Therefore, primary rise in fuel sales with a rising price can be explained as an exception to the law of demand.