Commodity Prices, Oil and Resource Shortages

6 06 2011

Our article can be found here, and statistics on rising oil prices can be found here.

 

Questions:

1. Who do you believe holds responsibility for rising oil prices: Speculators, market commentators, suppliers, or a combination of all of them?

2. How do you think rising oil prices can be reigned in? Should they be reigned in?

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Economic Challenges in Commodity Prices, Oil and Resource Shortages

4 06 2011

Key Concerns/Issues:

  • Commodity prices are on the rise. Concerns over the european debt crisis, slow growth in the US and the possibility that China’s economy may overheat are causing uncertainties in the market, and as a result, people are choosing to invest in more conservative, safer commodities such as precious metals.
  • Shifts in climate and ineffective transportation/storage are causing major losses in potential crop consumption and production, especially in crop-dependant countries. In addition to this, the current industrial agriculture policies make up one third of global greenhouse gas emissions.
  • Unrenewable sources of energy such as oil and coal continue to rise in price and are still relied upon for a large portion of energy worldwide. The market’s reigns being in the control of speculators has resulted in a steep rise in prices in the past couple of years, reaching significant highs in the 2007/2008 oil crisis.

Resulting Challenges to Canadians:

  • Increasing prices in oil, food, and other commodities means that Canadians have less disposable income available. This affects our economy in an adverse way: consumer spending encourages money to circulate instead of staying immobile in investments, and in some cases the majority cannot go without commodities such as gas- it is integral to a high number of businesses and industries as well as for personal use.
  • Oil is not only expensive, but unrenewable. It was long theorized that rising prices would encourage consumers to look towards alternative energy sources such as solar, wind and electric, but seeing as there is still much money to be made in the messier corners of the market, the shift has been significantly slower than is healthy for the economy and the environment.

Supporting Statistics and Evidence:

  • When oil per barrel was around $140 or $150, Canadians were paying $1.37 per litre, when this year oil is around $95 people are paying about $1.35 per litre (Federal Industry Minister Tony Clement)
  • Consumer prices rose 3.3% in the 12 months to April. On a seasonally adjusted monthly basis, consumer prices rose 0.3% in April (Stats Canada).
  • Currently, 35-40 percent of harvests are lost due to inadequate transportation and storage facilities, while a further 35-40 percent goes to wealthy Organization for Economic Cooperation and Development (OECD) countries.
  • According to experts like De Schutter, the inability of 10 percent of the world’s population to feed itself is a reflection of unsustainable patterns of consumption and deeply flawed models of industrialized agricultural production which, if allowed to continue, will divert 50 percent of global cereal harvests towards feeding cattle by the year 2050.
  • Industry insiders have indicated that oil speculators drive up market prices significantly; problematically, popular economics dismissed this concept, and further influences the market’s characteristic panic attacks.

Possible Solutions:

  • Agro-ecology, which includes systems that produce their own  fertiliser using materials and waste from the surrounding  environment, is being increasingly viewed as the only viable solution  to the hunger crisis. Since prices of fertiliser doubled during the  2008 food crisis, continents like Africa that import 95 percent of  their chemical fertilisers could see radically different outcomes in  production by adopting agro-ecological techniques.
  • NATO and global gobernments should help Arabic countries to recover from wars and conflicts in order to stabilize the situation. It will help to lower the oil price by reassuring speculators that oil will continue to flow.
  • A monitor should be established in order to control speculators and invesitgate possible collusions on oil pricing. It is integral that this panel represent an impartial global view of the situation, and not provide another revolving door for oil company moguls to use as a means of hiking prices even further.
  • In order to encourage both environmental responsibility as well as fiscal economic improvement, the government should continue to offer or increase funding for reimbursements and incentives for purchasing green and/or renewable technology. Not only will this eventually eliminate oil prices from everyday Canadians’ list of economic woes, but it will also encourage new facets of business in technology and engineering.




Income Tax- Pros and Cons.

25 04 2011

(Aparently I didn’t get to posting this, I could have sworn I had, my mistake

Regards,

Unicorns Everywhere)

PROS:

Fairness: Canadian income taxes are a progressive tax based on marginal income and tax brackets. Simply put, your income is put into levels and then you are charged accordingly. Because of this those who make more income then others are taxed more and conversely those who make less are charged less. Because the heaviest burden is put on the backs of those who can afford it the most, the system works to achieve a level playing field for all.

We all remember those times in monopoly where your jerk of a friend lands on the Income Tax square and decides to count up all his assets and take off 10% instead of paying the $200. Yeah, that’s income tax.

Quick to impliment: From a government standpoint, because the reaction of the public is so quick, the government can quickly lower or raise taxes in order to achieve certain results. For example, in a government deficit, the government can raise taxes in order to quickly gain money in order to pay these loans off.

“Mr. President, we’re in a deficit” “Shut. Down. Everything.”

Stability: Income taxes are imposed on everyone who earns income, but unlike other kinds of taxes, they are relatively stable. For example, in an depression, the unempl0yment rate may rise to 10% and even then, the government will still gain money off of the other 90%. Because of this, the system does not take as much of a hit as other taxes.

Benefits to society: Sure, you may be paying through your nose with these taxes, but at least our parks are pretty.

CONS:

It’s taxes: Taxes are solely based on government benefit. From an economic standpoint, we know that because we are taxed, we lose money to spend which in turn affects the demand curve of all products. Because consumers don’t have money to spend, the economy generally falls with higher taxes.

Loopholers: When you have taxes, you have people who don’t want to pay taxes. People exploit the system by using loopholes, cutting money or just not paying them. Because of this, Revenue Canada has to hire over 90,000 people trained in auditing who simply revise the taxation system to make sure that it is air-tight and impossible to scam. These thousands of people could easily be put into better use and are an example of implicit costs (HEY MRS. CUTTLE, I’M LEARNING.)

Inconsistent Taxation: One gripe many people tend to have with income taxes is that it’s inconsistent. Warren Buffett, one of the world’s richest investors is only submitted to 17% tax, where his secretary has to pay 30%. The unfairness of the system tends to outrage people and because of the huge amount of people being taxed, there is very few resources able to be allocated to dealing with case-by-case basises.





Rise in food prices

7 03 2011

http://thecitizen.co.tz/business/14-international-business/8878-un-agency-projects-increases-in-global-food-prices.html

Cost of Factors of Production

Increase in cost of wheat and crude oil

FOOD