Chapter 1. Scarce resource and Opportunity Cost

The article: http://www.abc.net.au/news/stories/2008.01/30/2149569.htm

Summary

The article I read about is a report from ABC news about the huge increase in the price of oil over the past couple years. Dr. Jim Buckee, retired president and chief of Talisman Energy states that the increase in the price of oil is due to the huge demands from people and the limited amount they can pump out with their resources. The world has been consuming 30 billion barrels of oil per year. However, oil rig companies can only pump out 7- 8 billion barrels per year. Though oil supplies have reached its peak, the concept of oil running out is incorrect. There is still plenty of oil in the world. However, we need to drill even deeper into the earth inorder to get the oil. Dr. Jim Buckee predict that oil prices will reach $200 per barrel by the third or fourth quarter of this year and prices will have to get this high before significant impacts will hurt the worlds economy.



Connections

I believe the connection of this article to our text is scarcity. I see scarcity as the infinite desires of people in a world where resources are finite. In this case, the huge difference in the supply and demand of oil has created a world scale problem. Humanity consumes gas at 30 billion barrels per year. Industries can only produce a maximum of 7-8 billion barrels per year. The huge difference in the supply of oil versus the demand creates the law of diminishing returns before us.World population will only increase while production of oil cannot keep up and is limited. Hence, I believe that oil prices are only going to increase as the years pass by as predicted by Dr.Jim Buckee. The problem can only be solved if we can find another source of energy and the rationing of oil supplies.


Reflection

I believe that the only way to decrease the price of oil is to find a substitute for the demand. We should focus on using renewable resources such as solar energy or magnetic energy to power our vehicles. This eases the strain on the earth and allows earth resources to rest and rejuvenate itself. Furthermore, because the supply of oil is controlled by American organizations. I believe that they should put their focus in finding a substitute for oil instead of spending billion of dollars on weaponry. If these two goals can be met in 10 or 20 years, we can save the world from an oil crisis because studies reveal that oil supplies can only last for another 60-70 years if there is no technological breakthrough.

so do we find an article online, copy down the link and summarize it?

Economics 12 : where is everybody?