In the summer of 2008, the price of regular gasoline in U. S. soared to over $4 per gallon. Then, in the fall of that year, the U. S. economy fell into a deep recession that significantly reduced consumers' income. Did the supply or demand curve shift in this circumstance? What happened to the equilibrium price of gasoline? For this part of the question, assume no other changes in the market for gasoline.

The Financial Crisis of 2008, was one of the most serious recessions the world has ever known, aside from the Great Depression of 1929. It was so severe that the entire planet was affected by it, even if the country that suffered the most was the U. S. Even to this day, 2019, the world is still recovering from that crisis.

Not surprisingly, all industries were hardly hit, even if the financial sector was the worst affected. The oil industry was also affected negatively. Because of the financial situation overall, and especially because the recession caused unemployment to rise, and overall life costs also to rise, people saw a severe reduction in their income, which meant that they had to start cost-saving measures, and saving money on all fronts. This included the consumption of gasoline.

The laws of supply and demand state that as people have a better income, they will pay for products and services at a given price, and continue buying those products, and demanding more. As this demand increases, so do prices, and so does supply for those products. Supply and demand go hand in hand and prices do too. However, with the crisis, and as people did not have the money, this affected both supply and demand as such: people were unable to afford gasoline at such high prices, therefore the demand curve shifted to the left, decreasing. People did not demand more supply of gasoline because they could not afford it. The supply curve, therefore, also suffered because without the demand for it, there was no need to further supply. So it also decreased. This, overall, hit the equilibrium price of gasoline as it had to be readjusted to meet the possibilities of the people, without further bankrupting the sellers of the product.