Omit #1, #3, #4, and #6


1. In Robert Murphy’s article “Oil Prices”:

a. In Hotelling’s Rule why must oil prices rise at the rate of interest? Explain briefly.

b. Why is the question “Will we run out of oil?” the wrong one to ask?

c. Explain what Murphy means by the approach of “Burn All You Want: We’ll Find More”.

d. Why are speculators useful in allocating uncertain supplies of oil (or other commodities) over time? Also explain what hedging is.

2. In Max Schulz’s article “The Quiet Revolution”:

a. What technological breakthroughs have enabled us to revolutionize the process of extracting natural gas? Explain.

b. Schulz argues that the second revolution complementing the first (described in part a.) is the development of a global market in natural gas. Explain briefly how this development is occurring.

c. How will removing regulatory barriers aid in this development?

3. In Sallie Baliunas’ articles on renewable energy:

a. In “Solar Delusions” why does Baliunas think PV (Photovoltaic) cells are impractical? Explain. (Hint: Consider cost, intermittency, and land area needed.)

b. In “Let the Sun Shine In” explain whether the storage of heat from solar panels is practical. Explain using Baliunas’ example of Solar Two. (Consider cost effectiveness and land area needed.)

c. In “Gone With the Wind” explain why realizing the potential of wind power will be both difficult and expensive.

d. In “Wind Magic” explain why intermittency is a fatal flaw of wind power. (Hint: Explain why electricity generation and the grid are important.)