Chapter One----Introductory Concepts

The article: http://www.economicnews.ca/cepnews/wire/article/single/125403/

Summary:
The article I read, "Oil falls below $106 on weak US energy demand" is from Associated Press. The article analyses why oil prices ended a choppy session in different respects. In the beginning, it gives background information that crude prices have risen about $15 in the past week because investors funnel money back into commodities on worries of a proposed $700 billion bailout of financial firms will undercut the dollar and boost inflation. Some analysts say crude could be heading higher amid falling global supplies. About 66 percent of oil production and 61 percent of natural gas output in the Gulf of Mexico remains shut-in after the passage of Hurricanes Gustav and Ike, according to the U.S. Minerals Management Service. The Gulf area is home to a quarter of U.S. oil production and 40 percent of refining capacity.

Connections:
The obvious connection to concepts in our text is scarcity. As mention in the article, 66 percent of the oil and 61 percent of natural gas come from the Gulf of Mexico. Because of the passage of Hurricanes Gustav and Ike, Gulf of Mexico remains shut-in. This means less oil will be provided to the public. Oil becomes a more scare source with more demands. It's obvious that oil price will increase. Also, this article states that economic experiments are conducted under conditions that cannot be easily controlled. Unlike an experiment in chemistry or physics, there are lots of external factors could influence the economic experiment, such as Hurricanes and dollar values in this case.

Reflection:
With more and more demands for oil and natural gas with limited amount, I am sure the price will increase even more. I remembered 3 years ago, the gas in Vancouver was only around 90 cents per liter and it's $1.30 per liter these days. I am wondering what the price of oil will be if nothing else used instead of it. If this situation continue on, when the oil will be used up? Also, related to this article, I agree economics is a science. Economics is based on facts that are obtained from careful study of experiments as well as others. The only difference is that there are lots of uncontrollable external factors influence the economic.