Introduction
The Americans are facing frequent blackouts and skyrocketing gasoline prices which point to an impending energy crisis. The US president advocated for tapping oil reserves in northern Alaska. The following are the cost benefits of demand and supply and their effects on the environment. If there is drilling in Alaska, the domestic supply of oil will reduce dependence on other countries e.g. Canada and the middle east countries.
Main body
When the government initiates the drilling, there will be positive benefits to the economy in general. First, the increase in oil supply will ensure that prices of most goods in the market will fall since the price of oil affects the price of almost all commodities. When prices fall, the consumer’s purchasing power will be high and this means that the aggregate demand in the economy will increase. The other factor that will contribute to an increase in aggregate demand is the creation of jobs for more people by drilling. When the aggregate demand is high, firms in the US economy will be forced to increase their production of goods and services. When firms need to increase their production, they will inevitably have to employ more labor ceteris paribus. The overall effect of the drilling in Alaska on the economy is that the economy will be rejuvenated and this cannot be more welcome in the united states at this time of financial crisis.
On the other hand environmentalist such as the World Wildlife fund argue that if drilling in Alaska is allowed, there will be irreparable damage to the ecosystem, since it is a wildlife conservation area. (Margaret Williams, 2008). Other lobby groups argue that the local Alaskans and the wildlife will be endangered. (Andrew Post, 2008).
The fears of the lobby groups are unfounded. This is because the technology that has been developed will enable drilling with enormous utilization of a small piece of land with very little if any, impact on the environment. Apart from that, there are other issues which have to be considered in this situation. The united states are facing an energy crisis and there is a need for the government to find alternative dependable sources of energy. Drilling in Alaska will be a good place to start. Secondly, the united states are facing an economic crisis. Thousands of people are being laid off from their work. The drilling will offer jobs to thousands and inject billions of dollars into the united states economy. Financially, drilling in Alaska makes sense as there will be about $138 in taxes to the government. The Alaskans also support drilling in Alaska due to the potential benefits. (Andrew Leonard, 2008).
Reference
Andrew Leonard. How the World Works. Sarah Palin, Drill, Drill, all the way. 2008. Web.
Andrew Post. ANWR drilling benefits Americans. 2008. Web.
Margaret Williams. Offshore Drilling in Alaska: Time to Slow the Rush. 2008. Web.