For OIL, identify the actual DEMANDERS (hint — do YOU demand oil—do YOU go out and buy barrels of oil?), and the determinants of DEMAND in the U.S. and throughout the world. In what markets is it an “intermediate” good and in what markets is OIL a final consumer good? Keep in mind the USES of oil, and its link to “energy”, as well as its use as an input into non-energy products. Do “we” (consumers) demand OIL directly?
Who/what are the “SUPPLIERS” (owners and producers) of oil, and of products made with oil (are they the same suppliers?)?
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Now let’s concentrate on the use of OIL as an input to provide ENERGY products (e.g. power (electricity), heat, jet fuel, gasoline, etc.). What other sources (or inputs into the generation) of energy do we have available today (including what we call “alternative energy”)?
What factors cause demand for OIL (SHIFT the Demand curve out or in) to grow or shrink (or grow faster or more slowly)? Which factors can be influenced by U.S. consumer/business behavior or by U.S. government policy, and which can’t, and why? In your discussion, refer to consumer preferences, consumer incomes, business uses, technology changes, pollution and global warming, economic growth (U.S. and elsewhere) and complements and substitutes.
What are the determinants of SUPPLY of oil and of oil-based energy products, and what can make SUPPLY increase or decrease (SHIFT these supply curves in or out)? Consider natural resource ownership, extraction technologies, international trade & finance, transportation, refining technology, and the distribution system issues when you address this.
What about those alternatives to oil and other current forms of generating/supplying energy? How are they influenced by changes in the oil markets, by governmental policies, and by technological changes? How do they influence the DEMAND or the SUPPLY curves (and in which markets)?
Now consider the energy policies of the Obama Administration, and the positions taken by the Romney campaign.
How do they impact the oil and energy markets? What policies are being proposed by Republican opponents? What are the BENEFITS and COSTS associated with each side’s policies? Consider policies:
encouraging or discouraging drilling for oil or natural gas in US lands and offshore,
regulating pipeline construction,
subsidizing the development of alternative energy sources
mandating ethanol content in gas
mandating car mileage
mandating light bulb use
How do they impact the oil markets, and why? How do all of these relate to the issue of ENERGY INDEPENDENCE (define that first!)?
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