Lesson: How Oil Prices Affect the Economy

Conversation

Answer the following questions. You might be asked to write them down or answer them out-loud.

1. How important do you think oil is in our lives?
2. Do you understand the impact oil has on the economy?
3. In the world we live today, do you agree that everybody is oil dependent? Why?
4. Should we allow prices to be so dependent on the consumption of oil? Why?
5. Are there any wars that are started because of oil?
6. Do you think we will one day run out of oil? How soon do you think that will happen?
7. Have you ever heard about the Second Industrial Revolution?
8. What are some alternatives to oil?
9. Nowadays people are trying to be 'green', give some examples of what this means.
10. When possible, do you substitute your car for a bike, walk, etc?

Vocabulary

Look at the vocabulary below. Take time to explore the links for their definitions in English and their translations to Portuguese. When you are done, make a sentence with each word. Ask your teacher if you should write them down or say them out loud.

DT   strong

DT   struggle

DT   freak

DT   deal

DT   oil

DT   abundant

DT   resource

DT   crude

DT   byproduct

DT   waste

DT   grow

DT   fuel

DT   ton

DT   arguably

DT   peak

DT   suck

DT   barrel

DT   lifeblood

DT   collapses

DT   rely

Video

Watch the following video but DON'T read the transcript yet.

After watching the video do this listening exercise.

Reading practice

Read the following transcript then do the associated reading comprehension exercise.

ExpandTranscript:

You know, it seems like every time the economy starts to get stronger, oil prices go up. Way up. And then the economy struggles again. So what's the deal with freaking oil? Well, you see, oil used to be a cheap and abundant resource. So much so that crude oil created a byproduct called gasoline, which at one point was just considered waste.
So we designed engines to run off that gas. And this was the beginning of what we call the Second Industrial Revolution, and it's a time of great economic growth. It made it so that most of our transportation and distribution of goods is dependent on oil; 35% of the United States energy comes from oil. We also grow our food and petrochemicals made from oil. Construction materials are made from oil. In fact, Americans consume petroleum products at a rate of 3.5 gallons of oil per day. And that's not just in fuel. Here's a list of other things that we use that are made from oil.
Now, here's the problem: while there used to be plenty of oil that was easy to get, today we've used a lot of it. But don't let those tree-hugging, Earth-is-your-mother kind of people freak out on you, because there's still a ton of oil left in the ground. In fact, arguably we haven't even hit peak oil yet. Meaning that there's still more oil left in the earth than what we've taken out.
But here's the thing: Human population is growing rapidly and certain countries like China and India, who are largely responsible for putting so many new people on this planet, are becoming industrialized and using more and more oil. So, while there's lots of oil left to be sucked out of the earth, there's more and more people consuming that oil. So, in the early 1900's when we first discovered oil, the amount of oil available per person was growing steadily until 1979. You see, BP discovered in a study that it was that year that the amount of oil available per person on the planet peaked. And ever since then has been going down just as fast as it went up. In fact, for the past few decades, we consume 3.5 barrels of oil for every new barrel we find. So, because of population growth, oil is going to become less abundant and harder to get to… unless we could find a backup planet.
So, here's the real problem: when the economy is humming, we're producing more, buying more, transporting more. So, in turn, we use more oil. Which makes the price go up. And, since our economy is based off of oil, the price of everything goes up. Which means the amount of things we can afford to buy goes down. And that makes the economy slow down again.
In fact, every time we try to work ourselves out of a recession, we bring the price of oil back up with us, because it's the lifeblood of our economy. So, remember in July of 2008 when oil hit U$150 per barrel? Well, that seems to be about as high as our economy can handle before everything collapses. If we really want to see our economy prosper again like before, we can't rely anymore on the Second Industrial Revolution. What we need is to build a new economy that's not dependent on oil. What we need is a New Industrial Revolution.

Writing practice

Write a couple of paragraphs talking about what would happen today if we ran out of oil. Are there any other solutions? Which ones? Make sure to use words you learned from the text and try to make it as long as you can.

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