Fig. 1: Illustration of supply and demand in the long term.
From: The effect of European fuel-tax cuts on the oil income of Russia
Oil demand for road transport in Europe (DEU) increases by a tax cut (the DEU demand line shifts to the right from the solid to the dashed line position). Consequently, total world oil demand (DEU+ROW) increases by an equal amount (the DEU+ROW line shifts to the right from the solid to the dashed line position). World oil supply (S) is somewhat elastic and a new, higher, equilibrium price is attained at a higher quantity level (dashed lines).
