Article:
http://www.guardian.co.uk/business/2011/mar/04/oil-prices-rise-again-libyan-fighting
Summary
The article mentions the rapid increase in oil prices, in one morning it had risen more then a dollar and Brent crude oil has risen from $116.20 which is up 1% due to fears the crisis was going to spread from North Africa to oil-rich countries in the Gulf. Chris Huhne is quoted saying,"the UK's climate and energy secretary, warned of a 1970s style oil-shock. He said if the oil price doubles from $80 a barrel last year to $160 a barrel this year, this could wipe £45bn off the value of the British economy in the next two years. "This is not just far-off speculation: it is a threat here and now."
Connections
The relationship between this article and Chapter 6 is that it is an example of aggregate demand. Aggregate demand is defined as "the total demand for final goods and services in the economy at a given time and price level." The price of oil has increased dramatically from 80$ last year to 116$ this year and the effects are global. Due to the increase in oil transportation will be more costly as well as other products such as food and goods because it will cost more to export and import products. This will effect many people worldwide as they will have to pay more for their goods and travel.
Reflections
With the price of oil increasing by such a dramatic amount, the daily life of the average person will be affected. Driving, food, goods and even people who switch to public transit will suffer. Oil is a crucial product in our society, without it everything will grind to a halt. Even with rising prices people will still be forced to buy oil in order to go about their day, unless they're bikers but they are irrelevant.
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ReplyDeleteI agree with you in the fact that prices of food will increase, since oil is increasing. Oil is a very important product that consumers need for transportation. Although some people take the bus, you're going to need a car if you want to go to Abbotsford in a hour. Also, another factor with the consumer spending is the demand will only rise to a certain price before consumers will realize gas is too expensive.
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