finalexam - University of California Irvine ECONOMICS 149...

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University of California Irvine ECONOMICS 149 ENERGY ECONOMICS Spring 2006 Final Examination Dr. Tony Finizza June 12, 2006 (Due by the end of the day June 12, 2006 by email or delivered to my mailbox in Room SSPA 3151) Student Name ________________________________ 100 Total Points ( Points will be deducted for unnecessarily wordy answers.) (1) (10 points) Dr. Philip Verleger, an eminent oil economist, stated in the Wall Street Journal that, “It takes a very big oil price increase to have a big impact today.” He estimated that real (inflation adjusted) oil prices have to rise at roughly five times real income just to keep the nation’s gasoline demand flat. Since he expects real income to rise about 3% a year, real gasoline prices would have to surge 15% to prevent consumption from growing, according to his analysis. If you agree with his model, show how he must have gotten his results. If you do not agree with his analysis, describe why you differ. (2) (15 points) According to the Financial Times , OPEC is considering enlarging its membership for the first time in 30 years to include Sudan and Angola. These two countries are among the world’s fastest growing oil producers: Angola produces 1.25 million barrels a day and Sudan produces .36 million barrels per day. Their membership
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This note was uploaded on 06/21/2008 for the course ECON 149 taught by Professor Sohrabian during the Spring '08 term at UC Irvine.

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finalexam - University of California Irvine ECONOMICS 149...

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