Question

Consider the markets for fossil fuels (oil, coal, natural gas) and alternative energy sources (solar, wind, geothermal power etc). Due to the current climate change, let's say we desire to have people use less of the fossil fuels (which produce greenhouse gasses that cause global warming) and more of the alternative energy sources. Using the concepts of Supply and Demand, discuss how the government can use policies to shift these curves, and what the results will be on the quantities and prices of the fossil fuels and the alternative fuels. Describe your specific policies. Describe the resulting shifts of Supply and/or Demand of both fossil fuels and alternative energy sources. Describe the resulting changes in quantities and prices of both fossil fuels and alternative energy sources. Of the policies you described, which are your favorites, and why?

Answer 1

Go Green is the tag line of every country's economic policy. Looking at to the current senerio of the world most of the countries are switching their energy respources from fossil fuels to renewable resources less enviropnmental friendly resources. IN this regard there will be definitly effect of such policy changes on demand and supply of both fossile fuels and alternative sources of energy. The folowing changes will take place on demand and supply of these resources.

1. There will be decrease in demand for fossile fuels and demand curve will shift leftward. At the same time oil producing companies will start producing less and supply may switch over to leftward .In this way botm demand and supply curve will shift leftward which will results in decrease in quantity and prices of oil in future.

2. In same way as government is giving more emphasis on alternative non conventioanl and renewable sources of energy, demand for such resources will rise and at the same time more compnies will come to produces such resources.As a result demand and supply will rise and curves will shift rightward. ahich will in turn increase in prices and quantity both in future.

In my view it is the need of the hour to think about alternative sources of energy for the better and safe world. Fossil fuel will exsaust one day. They create more pollution and less enegy effecient and therefore we have to think about alternative sources of energy which are renewable, non conventional less pollution creating and cheaper. A polciy maker can think about wind, solar, geothermal,tidal, biofuel energy in this regard.