CHAPTER 2 Media Article
Oilpatch Drillers Expect Layoffs in 2007,
National Post November 1, 2006


This article is indicating that low natural gas prices and rising costs are subduing Canadian oil companies. As a result, programs are expected to be cut along with lay offs of almost 2000 workers, mostly in the summer. However, winter drilling should not be affected much since some areas “can only be accessed when the ground is frozen”. Unprofitable "programs such as shallow gas and coal bed methane” will likely be cut. In addition, “a warm winter will keep gas inventories overstocked," further “continuing the year-old price slump“. Chris Theal, an analyst at Tristone Capital Inc. predicts, “pull back in drilling should reduce natural-gas supplies and push prices up again”.


Connection to Chapter 2- supply, elasticity, and the total revenue approach to price elasticity of demand

This news report is related to chapter 2 through the topic of supply, inelasticity and of the total revenue approach to price elasticity of demand. It provides an example of how low prices decrease the amount suppliers are willing to produce, since low natural gas prices are the main reason these oil and gas-drilling contractors are being reluctant to spend money on exploration. In addition, this article also shows us that production costs are indeed a factor of supply because rising costs are another reason oil companies have for decreasing activity. Furthermore, weather conditions also affect the supply of this good. Oil companies prefer colder weather. Not only can some areas only be “accessed when the ground is frozen”, warm weather increases “storage levels of natural gas,” decreasing its price. Finally, the total revenue approach to price elasticity of demand is another concept in chapter 2 that appears in this article. These companies know that they have an inelastic product. Price decreases do not benefit inelastic goods. To suppliers of oil, price decreases just decrease their total revenue. In order for them to increase production prices need to increase first.

Personal Reflection

I am divided on this issue. I think the actions of these companies are understandable but laying off 2000 workers is harsh. As a consumer, I do not want gas prices to rise, since that would increase home heating costs, among other things. However, a lot of people will lose their job, if gas and oil prices do not rise. A compromise must be reached. If only gas and oil prices would not fluctuate up and down, but instead remain constant, at a reasonable price. There wouldn’t be much to complain about then.


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CHAPTER 1 Media Article
"Fisheries Minister Insists Canada on Right Track in Protecting Marine Species",

NEWS 1130 November 3, 2006

There are varied reactions to the prediction that world fish supply will cease by 2048. Some say its “alarmist”; others say it “provides important warnings.” In Canada, Loyola Hearn, the federal fisheries minister, claims that he has been responding appropriately to counteract mistakes of the past that has caused the decreased fish stocks. For example, he is “trying to shift the government’s approach to fisheries management to one that considers the whole ecosystem, rather than focusing on single species,” to protect this resource. However, ecologists think the government is not doing enough. Bob Rangeley, a director for the World Wildlife Fund, even accuses the government of inaction, including doing nothing about countries that violate fishing laws. The diverse species in the world’s oceans are disappearing with over fishing and pollution. “Thirty per cent of commercially fished species have already collapsed.”

Connection to Chapter 1- scarcity, and resource ownership

This article is about a scarce resource, fish, and how the Canadian government, with power over our resources, can make a difference. As I have learned from chapter one, a scarce resource is a resource, which is limited in supply. Fish is a renewable resource but over fishing is causing it to become increasingly scarce. The depletion of fish is becoming so critical that a prediction has been made that by 2048 there will be practically no more available. From what I leaned in chapter one, I can conclude that as world fish stocks continue to decrease the price for fish will increase. If fish are disappearing at the rate this study is implying, the price of fish will probably quadruple in 5 to 10 years, since scarcity is a determinant of price, and prices increase as an item becomes more scarce. Resource ownership is another concept, which applies to this article. The government can apply regulations on fishing because they are active in a certain way in out economy. They could help conserve Canada’s and the world’s supply of fish, as argued by these ecologists, if they took action. However, since the amount of fish available to be caught would probably then be regulated, the scarcity of fish would still increase, and prices still rise. This article is related to chapter one through the concept of scarcity and resource ownership.

Personal Reflection

I am unhappy about the state of our oceans. Not only is fish an important source of nutrients, its a very depressing consideration to think of all the diverse sea life disappear. 2048 is not a long ways away and I have to admit that I will miss eating seafood. If nothing is done about this problem, fish will increase in scarceness and, soon, I will not be able to afford to eat fish anymore. I agree with the economists, the government should be doing more. They should be putting money into solving this problem not the war. Moreover, contaminated oceans do us, humans, harm too since all the water on Earth is the same water “recycled” over and over again. Pollution is getting out of hand, the fish are suffering, and we will be too.

http://www.news1130.com/news/national/article.jsp?content=n110353A