Class 2 9/2/2011

The second day of class in economics 108 had some interesting topics that we discussed. One topic is “will the natural resources the earth has like oil ever run out.”  Research showed in 1970 that there was only 32.2 years of oil left in the ground meaning that in 2002 we should have ran out of oil. Fortunately the study was redone in later years at it was found that there are thousands of years of oil left in the ground. Professor Rizzo gave a great analogy for this to help the class understand it. He said that if a person was given a room full of pistachios for free but had to leave the shell in the room after he finished eating the pistachio, after a while it would become harder and to find a uneaten pistachio in the mess of shells and the person will quit looking for it. This is what the world is going to do with oil when it becomes very scarce. This is part of the reason that the world will never run out of oil.  Thinking like this is part of the reason that t we’ve never ran out of a resource in the history of humanity.  An interesting fact that was presented to the class is that oil is cheaper today even with recent soaring gas prices than when oil was first used as a fuel.  Another reason that the earth will never run out of oil is that oil is organic, and the sun can make an infinite amount of fuel and oil. As the price of oil per barrel increases, oil companies purchase more oil so that they can make a bigger profit off of people buying it.

Some people become to crazed over potential incentives. Professor Rizzo told the class that Exxon wants to drill the North Pole for oil after the ice caps in that region melt. This could take hundreds of years to occur, but oil companies think about it anyway based on the big time profit that they can make off of it. One incentive that people go crazy about is saving money. This is why many Americans keep their house colder in the winter months so that they can save on the heating bill since they will need less oil to heat the house. Better energy saving techniques has slowed down the per capita in the US by 20% since 1970. This is very economically productive in the sense that not only does it save money, but it also saves up resources and energy that is put into each house to heat it. 

Other interesting things that I learned in Professor Rizzo’s class today was that economics is the study of scarcity, as well as that economics is a social science that helps you get the most out of life. Multiple beings being on earth has kept our species going. We’d all die without each other. But we are trying to become better self sufficient in large part due to recent technology booms that limit the amount of face-to-face communication that used to occur so often amongst people in the past. I’m starting to understand a little better what the whole meaning of economics is. Professor Rizzo is very energetic in class, which I like because it keeps me focused, and into learning what he is teaching.

We were assigned to read I, Pencil which is a great story written by Leonard Read. It talks about how error begins when one tosses humility aside. It has a great meaning that one person can't solve everyone problems, but a bunch of people working together doing the things that they are specialize in so that the best ideas can happen.  No one person knows everything which relates to the saying the two heads are better than one. It's like a puzzle. You need all the pieces to complete it. You need all of the knowledge you can from various sources to make the best economic decisions.