Class 2- Myans Can't Economize

In our second class (yes I was sitting in the front row and no I didn't catch any money) Rizzo put a number up on the board: 531 billion. After a few minutes of guessing, we determined that this was how many gallons of available oil existed. Then a new number appeared, 16.5 billion, the amount of oil we use per year. This meant that in 32.2 years we will be out of oil. I didn't know how I was going to tell my parents that in 30 years they wouldn't be able to use their old people motor scooters that we are all secretly jealous of.

But Rizzo dismissed my fears and exclaimed that we will NEVER run out of oil. This is because people economize. These stats for oil were actually from 1970, meaning we are going to run out of oil in 2012. This is the data the Myans used to foretell the end of the world. However, Myans can't economize. Today we actually have 3 times as much available oil and use twice as much oil every year. HOW?

To explain this, Rizzo used the Pistachio example. There's a room full of pistachios and we can all eat them and do whatever we want to them, but we have to leave the shells. Eventually it is hard to find the pistachios and almost not worth getting the ones on the bottom. But if a Pistachio company is planning on giving you $100 for the next pistachio you find, then the nut is worth getting. Suddenly people are racing around finding nuts, going to other countries for nuts, and doing anything they can to find nuts to sell for such a high price. But if pistachios are too expensive, people will stop eating them and will switch over to peanuts. Everyone is reacting. This whole example models our oil industries.

The rising oil prices cause drilling companies to try harder to find oil. However, the rising oil prices also cause everyone else to react, to economize. People start to invent ways to find oil. People start to find alternative fuels. People won't drive or heat their homes as much. We all react to rising oil prices. We all economize.