Economics is the study of how human beings use the scarce resources in the environment to satisfy their unlimited wants. Various economies in the world have been analyzed by financial and economic analysts who have the knowledge in economics. Some of the analysis has been put into writing in articles as well as journals. This has been important in evaluating the causes and impacts of the changes in economic activities in the world. “American Trends in Oil: Less of a Menace from Oil” is one of the articles analyzing the economic activities in the United States of America.
This article tries to analyze how the prices of oil have impacted the general global economy. It argues that the increase in oil prices has become a burden to the users of vehicles and also to producers who use machineries requiring oil. The article has however focused on the importation and production of oil in the United States of America. Most notably, the production of oil in the United States of America has increased, meaning that less imports of oil will be required in the country.
According to this article, there is an increasing consumption of products of oil in the United States of America. Despite the fact that the country is producing oil, the increasingly large demand in oil products has also increased the demand for imports. Most oil organizations have predicted that the demand for oil is likely to increase in future. For instance, the level of oil consumption increased from the year 2010 to 2011. This shows that there is a high probability that the results will increase in future. It is also notable that the demand for oil in the United States of America is inelastic.
The article has argued that the high increase in demand has made the price of oil to increase. This has become a burden to many production firms which are now opting to use alternative ways of production. Most importantly, researchers have been able to come up with other sources of energy that can be renewed. One of this ways is the introduction of vehicles that involve the use of electric consumption. The article has analyzed the positive effects of using alternative ways of energy. The major positive impact of this is that it has led to the conservation of the environment due to reduced emission of fumes in the air.
In evaluating the contents of the article, it is important to give certain economic definitions regarding demand, supply and elasticity of demand. Demand is the quantity of a good a person is willing and able to buy at a given price and at a certain period of time. Supply is the quantity of good a seller is willing and able to offer to buyers at a given price and at a given period of time. In economics, a market is usually efficient if it is at equilibrium. In addition to this, the market is effective only if the equilibrium condition is met. The equilibrium condition states that the market demand should be equal to the market supply in order to be at equilibrium. On the other hand, elasticity is the relative responsiveness of the quantity demanded of a good in relation to changes in the factors affecting the demand of the good.
Economics has many theories that have tried to explain the concepts used in economic analysis. Since the article is majored on demand for oil, it is good to evaluate the theory of demand. The theory of demand states that as the price of a good increases, the demand for the good will decrease and vice-versa. The theory of supply states that if the price of a good increases, its supply will increase and vice-versa. The demand and supply of commodities can be explained better by the following graphs.
In graph 1, the equilibrium is obtained at the point where the demand curve and the supply curve intercept. In graph 2, a decrease in the price of a commodity will increase the demand and therefore shift the demand curve outwards to the right.
In economic analysis, it is important to evaluate the elasticity of demand and supply. The article has only explained the inelasticity of demand and failed to point out the elasticity of supply. This would be important in order to predict the future production behaviors of the various firms in the United States of America. In the above article, the major loser is the consumer. This is because his demand for oil is not ending and the oil prices are still escalating. The article has no bias since it has analyzed the true situation of the energy sector of united states of America. More so, it has not favored the consumers or the producers.
Based on the analysis made in the article, it is easy to predict what will happen in the future. According to the article, there is a prediction that people will consume more oil in the coming years. From this we can forecast that production will increase in future since many firms will be willing to take advantage of the increasing demand. However, consumers should be aware that the prices of oil are likely to increase due to the increasing demand. Finally, an analysis of the current economic situations is important since it helps us to make future predictions and to prevent any expected negative impact on the economy.
