Sierra Club
Economic concepts raised:
Factors that affect S and D for oil -
S factors:
drilling in Arctic (negligible effect on S of oil, and therefore a negligible
effect on p)
What is annual Q of oil consumed in US ? 7 billion
barrels
Available oil in Arctic 3.2 billion barrels (could possibly provide
1% of our needs)
Not enough to have an impact on the price.
Factors that could disrupt S:
Violence: Alaska man who fired at pipeline.
Impact of Cartel - OPEC's
control of Supply factors (we will talk about monopoly power later in the
semester)
Other issues related to S:
Cost of extracting oil relative to current price of oil(we will be discussing cost issues later in the semester)
D factors:
Transportation is the biggest user of oil
federal regulations on cars
affects demand
technological change:
Development of better fuel
efficiency
substitutes - alternative fuel sources (wind/solar), public
transportation
Can we show these various factors using S and D graph?
Other economic issues:
Distribution of resources/consumption
We produce 9% of world oil (and are
sitting on 2% of world's reserves), but consume 26% of world's oil
Trade:
In order to maintain our demand, we have to import most of the oil we consume.