Class Summary 09/02

Responses to Incentives as Both Producers and Consumers:

At the beginning of the class we were given data that stated we would run out of oil in 32.2 years, later we found out that this information was actually found in 1970; THEREFORE we should have run out of oil in 2001. TODAY we have triple the amount of oil recorded in 1970, and we are also consuming twice as much oil as in 1970. We haven't run out of oil, nor will we. 

WHY? 

Because, if you're a producer of oil and the price continues to rise, then you want to sell more and more oil to make more money. Your incentive as an oil producer is to make more, and find more oil. We would see more development of oil, and technology expanding to find and create more oil. 

AND CONSUMERS?

We respond to the incentive too. Some people may drive less, keep the house colder, they may even move. The point is we ECONOMIZE. Our incentives change. Because this happens we will eventually all walk away from oil and find other alternatives.