Toxic Water Created by Oil Industry

http://www.cbc.ca/edmonton/features/dirtyoil/tailings.html

Summary

Alberta's oilsands produce over 1.8 billion liters of toxic wastewater daily. Known as tailings, this wastewater is left after bitumen, which is used to make conventional crude oil, is separated from the sand on top of it. Tailings have been stored in open-air lakes for decades. However, there has been no attempt in the past to empty the lakes or the land reclaimed. Several plans to reclaim the ponds have been discussed, including the creation of End Pit Lakes, using tailing thickeners, cycloning or centrifugation. Some of the toxic tailings have leaked into the Athabasca River. The health implications of this pollution are vast. Research has shown that there are elevated rates of cancers among the citizens of Fort Chipewyan, a small village of 1,200 downstream from the oilsands. The residents, which rely on fish as a major food resource, have noticed their fish are deformed with crooked tails, bulging eyes, skin tumors and humpbacks. Although the government has never had formal regulations on tailings management of enforcement mechanisms, the concern of initiating these regulations have been increasing.

Connection: Third Part Effects

Tailings causing extremely high levels of mercury and arsenic in water have lead to the increased rate of cancer to residents of Fort Chipewyan. This is an example of negative third party effects. As a result of the free-market system and the lack of government regulation in the past, the oil industry has ignored the need to keep this toxic water under control. Furthermore, placing a system to capture the toxins would cost a lot of money. Recently, Alberta's Energy Resources Conservation Board released a policy which required the oil industry to submit its plans for the construction and operation of tailings ponds. Companies may be forced to invest a significant sum of money in controlling tailings. This may be further reflected in the price of crude oil from Alberta in future months.

Reflection

In my opinion, Alberta's Energy Resources Conservation Board has been slow in its decision to regulate the tailings created by the crude oil industry. Since crude oil is a source of Alberta’s major revenue, it would be logical to ensure that no harm is done to the environment in obtaining it. The lives of many people have been put at risk because Fort Chipewyan’s most dominant food resource has been damaged. The fish can no longer be consumed. The economy of this small village can easily fail simply because of the ignorance of the oil industry. The Energy Resources Conservation Board as well as the oil industry must act quickly to repair the crisis that has emerged.

Large Investments to Find Renewable Energy Sources

http://www.cbc.ca/news/story/2007/11/27/tech-google.html#skip300x250

Introduction

Google Inc. has announced that it will invest tens of millions of dollar in the search for renewable energy sources in 2008. Although the company plans to focus on solar thermal technologies, wind power technologies, and enhanced geothermal systems during the next year, Google Inc. also plans to devote a part of its research in smaller breakthrough energy projects. Currently, Google Inc. is investing in two companies conducting research in this area, namely eSolar Inc. and Makani Power Inc. Finding new ways to produce electricity will help lower the cost of the enormous amount of energy required to run Goggle’s data centers around the world.

Connection: Scarcity, Direct Costs, and Opportunity Costs

Today, coal is a major supplier of the world’s energy. However, since coal is a scare resource, a situation such as that caused by diminishing fossil fuels may begin to arise. Secondly, as coal becomes more scare, energy which requires coal to function will become more expensive. By investing in energy from renewable resources such as solar and wind power, the prices of these energies are less likely to rise since the sources are not scarce. This situation can also be related to the concept of direct costs and opportunity costs in this chapter. The direct cost is the money needed to conduct the research. The opportunity cost on the other hand is the money which Goggle Inc. could have earned with the tens of millions of dollars, including interest money. However, if finding a cheaper way of producing energy from renewable sources proves to be successful, the money that could be saved on energy costs could potentially be far greater than the money that could have been invested from the tens of million of dollars.

Reflection

Lately, the research for renewable resources has been becoming increasingly popular. There are frequently new commercials discussing the importance of investing in this area. In my opinion, Google Inc. made a good decision in devoting a portion of their fortune to find a renewable resource. If successful, this research will greatly benefit mankind. Soon, the resources which are providing the energy we are currently using will run out. At the moment, coal is the greatest provider of the world’s energy. Coal however, creates many unwanted greenhouse gases. Turning away from coal as an energy resource will lower gas emissions, help fight global warming, and reduce the world’s dependence on fossil fuels. New research in renewable energy sources will bring us to a greener and more pleasant future.

Chapter 2 - SUV and Truck Sales Plummet

http://www.washingtonpost.com/wp-dyn/content/article/2008/05/01/AR2008050103773.html

Summary

In recent months, the sale of SUVs and other large vehicles have declined significantly. The rapidly increasing price of gas has changed consumer preferences towards large vehicles. Prime manufacturers of SUVs and Trucks such as Chevrolet and General Motors, have suffered great loses. According to GM, their SUV and truck sales are 27 percent below norm. On the other hand, Toyota cars have had a 3 percent increase in sales. The majority of consumers are deserting their large vehicles and opting to buy smaller cars. Consequently, many manufacturers will change the type of cars they produce according to consumer preferences. The production of smaller cars, as well as hybrids, is increasing considerably.

Connections

To any vehicle, gas is a complementary product. The declining supply of crude oil has caused the price of gas to rise immensely around the globe. Since gas is required to run cars, the cost of driving has therefore increased. As a result of the change in price of gas, a complementary product, consumers are choosing to drive vehicles which use a small amount of gas in comparison to larger vehicles. Hence, the demand for SUVs and trucks has declined. On a side note, there has been a recent global economic recession. This will affect the decision to buy a vehicle for many families as they may expect a lower income in the future. As a result of these situations, the price of large vehicles has dropped drastically.

Reflection

Since gas is in limited supply, the price of gas will continue to increase. In addition to the global economic recession, it is not surprising that consumers are choosing, and will probably continue to choose in the future, cars which are more fuel efficient. For some, replacing their SUVs and trucks may be more expensive than simply suffering high gas prices. This is the result of a significant drop in value of large vehicles. For example, if a Land Rover LR3 used $1000 more a year in gas than a Toyota Camry, it would result in $5000 of extra money spent on gas for a period of five years. The prices of large vehicles however, are dropping by the thousands every month. Although the rising price of gas has caused trouble for many consumers, I feel that the shift in the preference of vehicles will help publicize the need for more environmentally friendly cars. More money will be allocated in research of hybrids and other fuel efficient cars, a great advantage for our hope of a green future.

Economics Blog - Milk Powder: Nutritious Calcium or Lethal Poison?

http://www.economist.com/business/displaystory.cfm?story_id=12304845

Summary
Milk produced by China’s Sanlu Dairy Farm, has been found to be lethal to humans. Four children are dead, 53,000 others have been taken ill, and the numbers keep rising. What is the cause of this dilemma? Melamine, an industrial chemical, appears to have been added to milk products, including milk power and fresh milk. Currently, the list has been expanding to include yogurt, cake and even China’s favorite brand of chocolate cookies. The Chinese Government is trying to intervene by hiring inspectors to enforce the quality of toxic chemical inspections. Astonishingly, inspectors have found melamine in milk powder produced in one out of every five suppliers. The chairwoman of Sanlu has been detained. In addition, four milk dealers have been arrested and 22 others are being held for questioning. Nevertheless, foreign countries, including those of Europe and Africa, have banned the import of Chinese dairy products. The damage to China’s economy has been done.

Connections
Healthy milk in China is becoming increasingly scarce. Parents, who fear for their children’s health, now only buy milk products imported from companies of foreign countries. The high demand for foreign milk products, as well as the scarce supply that is available to consumers, has caused the prices of foreign milk products in China to skyrocket. Accordingly, given their limited financial resources, parents now have to forfeit buying clothes, toys and other daily necessities for their children, not to mention forfeiting educational funds and the like. Moreover, parents cannot use the extra money in investements. That is to say, the opportunity cost in relation to obtaining healthy milk for their children has been soaring.

Reflection
This incident is an embarrassing failure for China's product safety system. Considering the fact that a similar incident had already occurred in 2004, it may seem that a pattern is emerging. The laws the Chinese Government has set in place does not seem to be the crux of the problem, rather it is the fact that these laws are not duly observed and strictly upheld. A solution to this crisis must be found. Otherwise, the parents will have to continue to suffer a high opportunity cost for the health of their children.