If the US government accept to open up the area for oil exportation, obviously the companies and the US state profit would increase, but on the other hand, one of the prime habitat for the polar bears would disappear and it won’t came back soon. If instead they choose to preserve the habitat, the US state and the energy companies would not make any profit out of it, but you would leave a vats area uncontaminated for the animals which live there.
Production Possibility Frontier
0
Point A on the diagrams shows the current situation in Alaska, where the entire wilderness is preserved and the minerals exportation is zero, and I t might stay like that if the US government choose not to let open up the area. Point B, if the government only give permission to certain companies and not open the area to everyone. Point C, instead, illustrate how the situation would be if the government decide to let the energies companies to act on Alaska. The square in diagram is the 30 million acres.
The energy companies were pushing to get this approved in order to get more profit. Naturally this issue has being considered many times, but at this stage when the price of oil is so high, unlike when this issue was firstly considered, finding oil in your country can very useful for its economy. So the 6th of February 2.6 billion dollars in oil and gas leases were auctioned off to energy companies. By doing this they have may already decided to use the oil in that area rather than preserving the habitat. This will allow the people to have energy at lower costs, instead to pay more for about the same service. However the FWS said that to one can actually go and get the oil out without a study that assessed the potential impacts on the polar bears.
So even if economics helps us to see the consequence, it’s upon us to do the “best” choice according to what we believe in. Even if we are concerned about the polar bears’ health and habitat, polar bears are not economically useful, as the US government doesn’t earn anything by deciding to stop the oil extraction from their habitat. They can be considered as a public good. Goods freely available, either naturally, like air, or from the state, like education in most developed countries.
Too many times society only looks at financial costs to decide the “best” option, however, opportunity cost give us a clearer indication of the true cost of our choices. Like Professor James M. Buchanan has explained in his book “.” Even if Economics help us to see the consequences of our choices it still falls on the society to determine which option represent the “best” choice.
Name: Alessandro Capozi
Date: 05/02/2009
Date of the extract: 11/03/2008
Word count: 694
Source of the extract: IPS news “Polar bears in limbo as drilling leases go forward” by Stephen Leahy
Section of the syllabus: Introduction to Economics, 1
