Global Supply Of Crude Oil Essay

Global Supply Of Crude Oil Essay

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As consumers, we often remain relatively unaware of the positive impact that international trade has on our lives. Many things that the United States imported are either things that we will not have enough to supply our demand like crude oil or things that will be more effective to import than produce it ourselves like textile products. If we forget the existence of the global supply of crude oil that will definitely increase oil prices and that will have huge negative effects in the U.S. economy that can be avoided by using international trade to import crude oil. The United States can manufacture textile products to reduce our dependency on imports, but doing it would be ineffective use of our scarce resources. Participating in international trade allows the United States to focus our resources on goods which we have a comparative advantage and export surplus supply in exchange for imported goods that the United States could not produce as effectively as another country. Countries face the issue that it’s not possible to produce all the goods their country needs while using resources effectively, as society has scare resources like time that forces us to think about opportunity cost. This is why we produce and export goods that we have a comparative advantage while importing the goods that we cannot produce effectively, so a nation can achieve outcomes beyond the production possibility frontier.

By comparing the opportunity costs the things that must be given up in order to participate in an action, a country can determine which goods and services it has a comparative advantage of production, or the ability to produce a good or service at a lower opportunity cost than another producer. Using this concept of comparative advanta...

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...r prices for a product, so if China does not sell a product for a lower price than another country, then consumers will buy the good from the other country as it offers the lowest price. Trade increases the variety of goods and services available to consumers as it’s possible to import goods without directing using resources to make them as the nation will likely not have a comparative advantage in these goods, so we will be forced to produce a good that has a high opportunity cost. Free trade allows the free-flow of technologies and ideas around the world, so the quality of life of citizens should rise, and the increase is not just in countries China but in the United States as well. Trade is not perfect, but the economic gain of trade and other gains mentioned in this paragraph that is caused by trade exceeds the costs of trade makes international trade beneficial.

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