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.