Suppose that more companies receive permission to drill for oil in Alaska and U.S.-controlled waters?

In addition, assume that the popularity of SUVs declines in favor of smaller, more fuel efficient automobiles. What will be the result on the market (supply, demand, price, and quantity) for oil in the U.S.? How does this move the supply and demand curve?Suppose that more companies receive permission to drill for oil in Alaska and U.S.-controlled waters?
There just isn't enough oil in US arctic waters to make much more than a blip. If we enlarge drilling operations, we have two options: A small, negligible but steady supply, or a big, short-term operation that would also make a negligible difference.


The big issue is that it鈥檚 mostly low-grade crude, and any economic benefit is probably offset by the twin bugaboos of the additional refining costs, as well as the inevitable environmental cleanup.





If we assume Americans start using less gas鈥攚hich is darn unlikely鈥攖hen gas prices go up as oil and gas producers adjust to preserve their profits.





America, however, is about to become a bit player in all this. China will, within 10 or 15 years, out-consume America for oil, and there are NO efficiency measures on the horizon there, primarily because the demand is for industrial processes, not cars. If America slows the rate of increase in consumption, it will just mean that the global rate increases slightly less quickly. Bottom line: Nothing America does is going to have much of an impact on demand or supply.