Authors libby rittenberg 716

Sources: U.S. Bureau of the Census, Statistical Abstract of the United
States, online; U.S. Energy Information Administration, Annual
Energy Review, online.
In setting their expectations, people in the marketplace must anticipate not
only future demand but future supply as well. Demand in future periods
could fall short of expectations if new technologies produce goods and
services using less of a natural resource. That has clearly happened. The
quantity of energy—which is generally produced using exhaustible fossil
fuels—used to produce a unit of output has fallen by more than half in the
last three decades. At the same time, rising income levels around the
world, particularly in China and India over the last two decades, have led
to increased demand for energy. Supply increases when previously
unknown deposits of natural resources are discovered and when
technologies are developed to extract and refine resources more
cheaply. Figure 13.10 "An Explanation for Falling Resource Prices" shows
that discoveries that reduce the demand below expectations and increase
the supply of natural resources can push prices down in a way that people
in previous periods might not have anticipated. This scenario explains the
fall in some prices of natural resources in the latter part of the twentieth
century. To explain the recent rise in exhaustible natural resources prices,
we can say that the factors contributing to increased demand for energy
and some other exhaustible natural resources were outweighing the
factors contributing to increased supply, resulting in higher prices—a
scenario opposite to what is shown in Figure 13.10 "An Explanation for
Falling Resource Prices". This upward trend began to reverse itself again in
late 2008, as the world economies began to slump.

Attributed to Libby Rittenberg and Timothy Tregarthen
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