Chapter 2

http://www.theglobeandmail.com/servlet/story/RTGAM.20061101.woilprices1101/BNStory/Business/

So what is all the talk about these days? Oil prices! Oil is essential to daily life for anyone who is living in British Columbia. We use it for food, work, and most importantly, transportation. So, what is happening with oil prices recently?

According to the article, oil prices have dropped and demand is low. But, refiners are actually boosting production. They are operating at two percent higher capacity than last week. The oil price dropping is due to the fact that this market really has nothing to drive for higher prices. The Institute for Supply Management’s manufacturing index even showed growth at its slowest pace in three years! However, the article does say that nothing is fixed and if something suddenly happens, then that “would bump up fuel demand and prompt a price spike…”

This article deals with the concept of elasticity and supply and demand. Oil demand is high for all the necessities of life, and oil is limited around the country. This leads to higher gas prices because everyone needs this resource. Generally, prices should go up, but this article shows that oil prices are actually going down. So, what can account for this to happen? Simple. People are beginning to get fed up with such high prices for transportation gas and substitutes are blooming before our eyes. What was an inelastic resource is quickly turning elastic. The low demand for oil has a lot to do with substitutes such as hybrid cars, different types of fuels, and alternatives such as bicycles.

What I think is strange about this article is how oil prices and supply is going down, but the quantity supplied is actually increasing. If the price goes down, the quantity supplied should go down with it. However, this is a positive outcome for the citizens of British Columbia. They should see gas prices decrease a slight amount and stay decreased for a longer period of time. Since the quantity supplied is still increasing and the price is low, this should mean that there are a lot of gas and oil while they are being sold in a lower price. Strange, but good for the public.

Chapter 1

http://www.cbc.ca/canada/story/2002/12/14/softwood_mill021214.html

As we all know, land is scarce. This also limits space on our world for growing objects such as trees. Complications such as global warming are causing more and more forest fires and this only creates more shortage of trees for production of lumber.

This article revolves around a small British Columbia lumber town. They are fighting for their survival with workers losing their jobs. In the town of Clearwater, more than 180 workers are being laid off, which is nearly a fifth of the small town’s workforce. The reason for such a tragic story? Blame it on the high US lumber duty which has made it impossible for the mill to keep running. So many residents are moving out to search for jobs that even an elementary school is due to close down in May.

This article relates to scarcity. Lumber and the industry is a limited resource, therefore causing price to increase. The US however, is not helping by instating a duty fee which has made many lumber industries to lose business. Clearwater is a perfect example of what is going on. Industries are actually shutting down instead of expanding on a scarce resource such as lumber. British Columbia is actually one of the few places with abundant trees, but the problem is that our main export is the US. What we should be profiting on is actually losing money. The forestry industry is not profiting as much as it potentially can and the high US duty fees are causing minor lumber towns to close their main source of income and drive them out of business.

This is a real problem that is affecting the Canadian economy. What this means is Canadians will have to pay even higher on lumber because they cannot control where to export their own resource. If lumber is scarce to begin with, this problem is going to make it worse. Since production is decreasing, this makes the country have less of the product. If the product is scarce, the price will jump even higher. However, not only scarcity affects our economy in this situation. It is like a vicious cycle that is affecting the Canadian economy negatively. Since lumber mills have to close down their production, this creates a higher unemployment rate. Those who are unemployed now have no income and cannot use money to put back to the system to keep our economy running smoothly. So, this issue is hurting Canadians in more than one way.