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2015-12-15

Viewed 1280 times 2015-12-15 22:11 |Personal category:review|System category:Others

An article review

Crude –oil exports Binning the ban

Study about economy can be divided into two scopes: microeconomics and macroeconomics. While microeconomics concerns about household and individual company decisions, macroeconomics looks on a far broader general principles by which the economy operates. Among the areas that macroeconomics may cover, I think the most interesting is international trade. International trade does not alter other variables in the economy, neither does it influence equipment and technology. It arguments the number of people involed in an open ecomomy just by exchanging items. Though  benefits can be gained otherwise by technology advances and increased efficiency, these require efforts, but trade effortlessly bring down price and allow companies and individual enjoy the extra benefits by exchanging. An autarky and an open economy, under the same level of prodution capability, would bring its people different standard of life.

The article firstly presents a recent plea from American local crude oil producers that oil export ban set in the background of energy crisis in 1970’s be lited. Their argues such ban ease their pressure on cash.(Currently crude oil price is $10 below the international price).if such ban were lifted, as crede oil production in US is large but not as large enough to produce a decisive impact on oil production, the internation price of crude oil would be brought down a little bit by this introduction. In this case, oil producers are going to make a big foutune on the import opportunity. As oil price would spike to the current oil price and they can earn extra benefits that they otherwise could not provided the ban still exists.

In the following section, the article tells that a lobby group formed by delegates among oil producers has launched a campaign at the legislative level. And politicians from the legislative branch are pondering about such measure.

Such alleviation of ban will not be welcomed by American oil refiners

The total surplus of the market will be increase by the alleviation of the ban. Trade affects the benefits of people. The situation of the oil producers will be better as he can sell oil at a higher price. The situation of the oil refiner will be worsen as he has to accept the international price. As we look at a large picture of the impacts on both sides, we can find that the total surplus will be increase as the amount of extra gains of the oil producers are more than enough to offset the amount of loss of the oil refiners.

The fact that American is able to produce crude oil at a price lower than international price reflects America’s absolute advantage in producing crude oil. According to definition, absolute advantage is the ability to produce more of a good or service than competitors using the same amount of resources.

 Similarly, lower price of crude oil means American is able to produce the same amount of crude by consuming fewer resources. Absolute advantages help a country to

According to definition, comparative advantage is the ability of an individual, firm or country to produce a good or service a lower opportunity cost than other producers . Although other countries may not have absolute advantages over American in crude oil production, but it is still able to enjoy the benefits of international trade by exploiting comparative advantage. For instance, Brazil may have comparative over America in producing crude oil and steel. Although producing both steel and crude may cost more time in Brazil than in America, Brazil is able to produce a ton of steel at the sacrifice of crude oil production that is fewer than that of America, than it may choose to produce steel in exchange of crude oil from America.

The second point that critics of such ban argue is that this pratises undermines US position in the World Trade Organization (WTO). To elicit a strong argumentation, it cites US moral authority is under fire for this ban and draws a comparison between China’s ban on scarce resources export, which is berated by the WTO.

the last paragraph of the article concers about a wider range of factors including ecomomics and politics. As the ban on crude oil export is no longer popular among voters, we know that in the economic sense, this ban is better to be renounced as it decreases the total surplus.

The article was well written and highly informative of the readers. The arguments are firmly supported and persuasive. Intended readers may grasp the whole idea in a short time, researchers inspired by the article would like to offer their comments. The author carefully se Throughout the article, the author remains unbiased and analytical. The article offers critical insights into economic issues.

One of the characteristics that I like best is the use of statistics. Statistics gives the readers a numerical scale of the figure under discussion. For instance, the article so tells that “A study by I HS, a consultancy, says that free trade in crude would boost output, investment, jobs, pay, profits and tax revenues—and GDP by $86 billion.”  Together with statistics, graph also gives a more vivid picture to the readers. The Economist is a high quality magazine. To maintain its status in the field, other than other factors to be considered, the ability of reflecting facts is clearly and desperatly expected.

(Opinions of the writer in this blog don't represent those of China Daily.)


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