Libya got way too complicated for me to talk about with any expertise. I forgot that Libya was not a signatory to the ICC treaty, which complicates how the NTC may deal with Gaddafis. It is in their best interest to turn Muammar over, as they can force Gaddafi to pay restitution and likely have a much clearer grasp on his assets. In part because the US and Europe have quite a bit of them. The possible movement of Gaddafi’s weapon stockpile may become a major player in threats from non-state actors.
But I can talk about oil, economics, and how we are totally fucked. Middle East turmoil once again showed us that our dependency on oil is a terrible idea. Oil is a perfect example of the fundamental economic problem, scarcity. Most consumable goods are finite and the health of an economy is based on how efficiently we utilize and distribute those goods. Sometimes the incentives to do this are pretty low. Wasting massive amounts of food has a relatively small impact on a wealthy nation’s economy. Food is relatively cheap and easy to come by in developed nations. This is one example of free-market’s inefficiency.
About 15% of the world lives in developed countries. Yet, both developing and developed nations lose or waste pretty close to the same total amount of food, about 650m metric tons. This does not take into account the large amounts of available calories lost when using resources to produce meat rather than non-sentient foods.
Food loss in developed countries comes largely from consumers and has little to do with poor infrastructure. In developing countries the opposite is true. Things such as poor food preservation and unreliable transportation severely affect the total food available to consumers. And when you live on a dollar a day, you cannot afford to throw away food. As a result each consumer in sub-Saharan Africa, south Asia, and south-east Asia waste only about 8 kg of food a year. This is compared to around 100 kg in Europe and North America. Food prices are directly affected by the price of oil. Increased petroleum prices raise not only the transportation costs but fertilizer and pesticides as well. Oil is used an ingredient in both of these chemicals and of course oil is often used as an energy source for their production.
***A Brief Explanation of Elasticity***
Elasticity is important in looking at the change of consumption of pretty much everything. It’s a way to quantify supply and demand. Prices go up, demand goes down. How much that demand goes down is elasticity. Here’s a great chart and description from Wikipedia:
| Value | Descriptive Terms |
| Ed = 0 | Perfectly inelastic demand |
| - 1 < Ed < 0 | Inelastic or relatively inelastic demand |
| Ed = - 1 | Unit elastic, unit elasticity, unitary elasticity, or unitarily elastic demand |
| - ∞ < Ed < - 1 | Elastic or relatively elastic demand |
| Ed = - ∞ | Perfectly elastic demand |
· relatively inelastic when the percentage change in quantity demanded is less than the percentage change in price (so that Ed > - 1)
· unit elastic, unit elasticity, unitary elasticity, or unitarily elastic demand when the percentage change in quantity demanded is equal to the percentage change in price (so that Ed = - 1)
· relatively elastic when the percentage change in quantity demanded is greater than the percentage change in price (so that Ed < - 1).
Ed = 0 and Ed = - ∞ don’t happen in real life. Any increase in price will not cause the demand of a good to drop to zero, nor will the demand stay the same at any price.
Medicine, especially for children is highly inelastic. If the government taxed these services it would be a great source of revenue. Of course, it would be incredibly unethical to discourage something with such a high positive externality, so it is avoided. This also shows why goods with negative externalities are highly taxed. Highly addictive substances such as tobacco are relatively inelastic, but the demand still decreases as prices go up. Tobacco companies know that their revenue will increase at even extremely high prices, which is why they have increased prices at a much faster rate than taxes have increased. Just another example of how tobacco executives are complete pieces of shit who invent terms like smokers rights and blame the government on all the problems smokers face. Fuck them.
***Back to oil***
Oil has is pretty inelastic, especially in the short term. In other words consumption of oil does not decrease much relative to price increases. However prices are extremely vulnerable to changes in supply, or eve possible changes in supply.
Finite energy sources suck. Greenhouse-gas producing resources are terrible for our environment and they contribute to volatile markets. Rebels took over Tripoli, futures dropped. Seems we were overly optimistic about the possible stability, prices go up. Before the war Libya produced 2% of the world’s oil. Two percent, that’s it. Saudi Arabia even picked up the slack. But markets sometimes look at the long game. Saudi Arabia won’t increase its production forever therefore supply will drop, of course prices will increase. While people are attempting to throw off a brutal dictator who has oppressed his people for 40 years, the markets are cheering for a return to stability. How fucked up is this? If the goods keep coming, who gives a shit how they get there?
Crude oil is also the only stock price the public wants to drop. Of course other raw goods, such as gold, aluminum, and copper, will also drive up prices, but these are more difficult to understand. We want to have as little incentive to not destroy ourselves as possible. If oil prices stay low or even just rise slowly, we can put off developing clean fuels and say fuck it to fusion and never become a Type I Civilization.
No comments:
Post a Comment