Question

• Starting in 2001 the Bush administration strongly supported the idea of increasing U.S. energy supplies by opening up the ANWR to oil exploration. Based on current assessments of the ANWR there are an estimated 5.7 - 16 billion barrels of oil in the refuge. There has been a considerable controversy about developing these oil resources with the Bush administration arguing, that allowing exploration would contribute to a reduction of U.S. dependence on foreign oil at a minimal effect on the environment of the refuge. Environmentalists argue that the effects on a fragile arctic envirnment and species of animals makes drilling and pumping oil from the ANWR too costly. Thus they strongly oppose drilling there. As of 2003 the environmentalists have been successful in blocking drilling in the refuge.

• For Critical Analysis:The issue is the same and your view may still be the same. However, this time I would like you to broaden your conversation using Aggregate-Demand / Aggregate Supply analysis. What would happen to the Short-Run Aggregate Supply curve (SRAS) if the congress decided to permit drilling and oil production in the ANWR?

Answer 1