Question

Oil is a heavily traded commodity. The impact of oil on trade is immense and touches the economy of every country in the world. It is an economic resource and a geopolitical issue. Research and answer the following questions:

1. Where does the US get our oil from? How much of it is imported?

2. How does price impact your consumption? Relate it to opportunity costs.

3. How does price drive production? Research how speculation plays into the price?

4. Without Government incentives and with the price of gas low...Will people stop buying hybrids? The government played a big role in this by creating higher standards and financing some developments – is this good or bad (why?). Is it time to get rid of the incentives?

5. What about fracking-should we do it? What about the environmental stand point? Should the potential harm to the environment be calculated into the cost?

6. Should we drill for oil off the coast of Maine?

Support your answers/opinions with research

Answer 1

1. US get oil from Canada, saudi Arabia, Venezuela, Mexican, Iraq and colombia. Around 70℅ it is imported from these countries.

2. There is inverse relationship between price of oil and it's consumption.

3. If price of oil increases then consumer will choose next best alternative i.e substitute of oil

4. Yes, In the absence of government incentives and low prices of gas, people will tend to stop buying hybrid or electric cars. This is good for the success of hybrid car market. Higher standards and financing developments will have a positive impact in hybrid car Sales. No it isn't the time to get rid of the incentives.

5. Fracking means drilling out oil from the grounnd. It causes displacement of living habitats from that place so the potential harm to the environment should be calculated because if there is oil reserves in some forest area then we have to cut down trees for drilling (franking).

6. According to the U.S Energy Information Administration, Maine had no oil or natural gas reserves as of May 2017, thus no fracking occurred in the state.