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Bees, oil and the Economics 101 lesson on supply, pricing

Consumption

I spent a recent Thursday as part of the Watch D.O.G.S. — Dads Of Great Students — at Christian Evers Elementary, where three of my daughters go to school. We get to hang out with our kids in their classrooms, during their activities — such as P.E., lunch and library — patrol the halls, etc.

It’s really a good program for dads. My girls’ friends are usually a riot to socialize with at lunch.

On this day, I was able to take in my fifth-grader’s gifted and talented class. After a couple of rebuses (kind of like the brain teasers from back in my day), their teacher, Mr. Cox, played a short video on the recent epidemic of bees mysteriously dying to the tune of “42 percent of the population.” He invited them to hypothesize on what the culprit or culprits might be and what could be the ramifications.

One girl thought it might be pollution. Mr. Cox told me he read it might be the result of the proliferation of smart phone usage (good luck putting that genie back in the bottle).

Some say pesticides.

The video implied what the consequences were when it indicated the pollination work that bees do. Nearly all the kids who offered their thoughts on the potential fallout pointed to decreased fruit and vegetable production.

Mr. Cox allowed me to “raise my hand.”

“What would happen then,” I asked.

“We’d buy fewer fruits and vegetables.”

“Why?”

“Because there’d be less at H-E-B.”

“And what about the fruits and vegetables that would be there?”

“They’d cost more.”

I told them that those high prices would actually signal to someone an opportunity to step in and try to solve the problem. Someone could invent some machine or method, something beyond our imagination, that could — to one degree or another — plug the pollination gap.

Harvard engineers are working on just such a robot-bee project right now.

This is what has happened in the oil industry in recent years.

When the price of a barrel of oil reached almost $150 in 2008, we started hearing murmurs, again, about “peak oil” — as in, “at the rate China is growing, not to mention the other BRICs and developing world, we’re bound to run out soon.”

Sure enough, the price resumed an upward trajectory after the recession of 2008-2009.

But something happened along the way. New methods of extracting oil became more viable. Suppliers saw what kind of price oil was fetching, and hydraulic fracturing — i.e., “fracking” — became a part of the American lexicon. Next thing you know, the U.S. was awash in new sources of North American crude. The new supplies would eventually be a prime catalyst in the cratering of prices.

Furthermore, the increased activity and competition behind the rising supply spurred further enhancements and refinements to the techniques, continually pushing down the break-even costs of operators. The North American energy industry had improved so much that production didn’t actually slow until this spring.

All because rising prices caught the attention of enterprising innovators.

This is one of the most important lessons I regularly try to impart in my classes. “We’re all demanders,” I tell them.

We know how we tend to react when the price of jeans goes down; we buy one more pair. Very few of us are suppliers in the “supplying goods” sense. We do, though, contribute our labor to a business that supplies a good. That entity doesn’t respond to prices like we individuals do as demanders.

When I then ask my students, “What does Levi Strauss or Lucky Brand do when the price of jeans goes down?” most of them, even my A students, invariably respond, “They offer more of them.”

The demand tendency is more ingrained in us than the supply tendency. This is a concept that could apply to any industry.

I once invested in a company that manufactured desalination equipment. I figured it was a good investment since we all need drinking water. Turns out it was a little ahead of its time. If, however, the dire predictions of overpopulation and subsequent resource depletion come true, we will need equipment like that to make ocean water potable.

The most inventive and innovative minds will need price signals to make apparent to them the viability of creating the machinery or equipment they envision.

Unfortunately, high and rising prices also lead to demagoguery by some public leaders. Shortages of necessities such as food, water and energy — what we call inelastic goods because of the relative inflexibility of demand for them regardless of income — understandably cause trepidation.

Think of those allegations of “price gouging” in the days leading up to landfall of a hurricane or price spikes in gasoline in past years. It hurts our pocketbooks.

However, trying to cap the price of such a good usually backfires. Ask any Venezuelan going grocery shopping. Suppliers see prices that drive them to seek more valuable uses of their time and resources. Rationing isn’t far behind.

Subsidizing favored industries and/or companies won’t necessarily work, either. Remember the solar-panel maker Solyndra? They haven’t been heard from since taking a half-billion dollars in guaranteed stimulus loans. The government can give out all the tax credits it wants on hybrid automobiles. We Americans will still tend to buy SUVs when the price of gas takes a dive.

Price signals work.

The very dive in gas prices we’ve seen recently is the result of an industry that went gangbusters due to technological advances made possible by high prices … temporary high prices. It’s not the end of the world if someone profits from solving such problems. Worse things have happened — like genocide, slavery and reality TV.

For nature’s purposes, I hope scientists find what’s been killing bees at such an alarming rate. Their pollination is effective, efficient and natural.

In any case, I’m sure I’m not the only one who has a kid who likes Honeycomb cereal. For all she knows, they come from bees, too.

My San Antonio



20 Comments on "Bees, oil and the Economics 101 lesson on supply, pricing"

  1. Rodster on Sun, 29th Nov 2015 9:58 am 

    It appears MonSatan is behind the Bee die off.

  2. onlooker on Sun, 29th Nov 2015 9:59 am 

    I think specifically “Roundup”

  3. Davy on Sun, 29th Nov 2015 10:10 am 

    Guys, any pesticides, chemicals, and pollution are bad for bees. I have a hive with another coming. They are doing exceptional because I have very little problems with the above. Modern life is bad on bees period.

  4. Rodster on Sun, 29th Nov 2015 11:50 am 

    I think specifically “Roundup”

    ————————————–
    Yup, the stuff that’s in Roundup isn’t good for Bees. And if there aren’t Bees, there won’t be any of us.

  5. onlooker on Sun, 29th Nov 2015 11:55 am 

    I am pretty sure the figure I heard was one third of our food supply is based upon pollination. I guess all life is slowly being rounded up on this planet. pardon the pun.

  6. Rodster on Sun, 29th Nov 2015 12:25 pm 

    “I am pretty sure the figure I heard was one third of our food supply is based upon pollination.”

    Correct, and Bees are responsible for about 80% of the total pollination.

  7. Steve Challis on Sun, 29th Nov 2015 2:59 pm 

    Onlooker or Rodster,
    If you have any link to evidence that it is specifically Roundup that is killing off the bees i would be interested in seeing it. I have seen many suggestions that neonicotinoids are one of the main culprits.

  8. Steve Challis on Sun, 29th Nov 2015 3:05 pm 

    Onlooker or Rodster,
    “one third of our food supply is based upon pollination” This sounds much too low. Perhaps the statement you saw was that one third of our food supply is based on insect pollination, and excluded the crops using wind pollination. Many staple food crops like corn, wheat, rice, soybeans and sorghum, need no insect help at all; they are wind-pollinated or self-pollinating.

  9. onlooker on Sun, 29th Nov 2015 3:36 pm 

    Sorry Steve, I was meaning to say insect pollination. As for providing evidence I believe their is ample on the Net on the general harmful effects of different chemicals and pesticides in regards to many insects. After all that is precisely what they are “pesticides” for killing pests.

  10. green_achers on Sun, 29th Nov 2015 7:43 pm 

    Um, get a clue, folks. You’re arguing about what’s killing the bees, and that’s not what the article’s about . It’s another nitwit free-market altar boy evangelizing that letting the market loose will solve our resource problems. I don’t know who I feel more sorry for, the teacher who had to be polite to the fool, or his poor kid. I’ll bet she wanted to fall through the floor when he started talking.

  11. makati1 on Sun, 29th Nov 2015 8:03 pm 

    green, the techie religion is still spreading. Almost as fast as tech itself is collapsing. Give it another decade and we will be back to wall connected phones and radios for entertainment, if we are lucky.

  12. GregT on Sun, 29th Nov 2015 11:32 pm 

    “green, the techie religion is still spreading.”

    This ain’t your grand-daddy’s religion Makati, this is a suicide cult.

  13. keith on Mon, 30th Nov 2015 12:08 am 

    I think round-up is killing bees. If glyphosates is in the bees, its also in the honey we eat. I’ve bought organic honey ever since I made this connection.

  14. apneaman on Mon, 30th Nov 2015 12:44 am 

    27 Examples of Journalists Failing to Disclose Sources as Funded by Monsanto

    “Following a Columbia Journalism Review article on whether science journalists should accept money from corporate interests and whether there is adequate disclosure of sources’ corporate ties and conflicts of interest, U.S. Right to Know reviewed recent articles to assess how often journalists and columnists quote academic sources without stating that they are funded by the agrichemical giant Monsanto.

    Our review found 27 articles quoting (or authored by) university professors after they received Monsanto funding, but without disclosing that funding.

    This is a collapse of journalistic standards. When reporters quote sources about food issues such as GMOs or organic food, readers deserve to know if the sources have been funded by Monsanto or have other conflicts of interest.”

    more

    https://ecowatch.com/2015/11/28/sources-funded-monsanto/?utm_content=bufferf932d&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

  15. onlooker on Mon, 30th Nov 2015 1:19 am 

    Universities, the Legal profession, the Health Industry, the Educational system and on and on have all be compromised for now decades in the good old US of A.

  16. Davy on Mon, 30th Nov 2015 6:59 am 

    Monsanto is an example of a thoroughly nasty business concern much like BP. These organizations are destroying our world and our ecosystem. They epitomize the seeking of personal profit at the expense of the public good. They will argue shareholder duties but this nastiness goes to the very heart of their corporate culture and leadership.

    Those of you who are down on roundup are missing the point. As a farmer that once used roundup ready soybeans I know how nasty the alternatives are. Roundup is much less damaging then 2-4-D or atrazine. The problem with roundup is it has become so prevalent in use.

    You all need to be bitching about the industrial Ag system itself. Then you need to face the music that billions will die without it. You further need to realize that this industry at its size and requirements to maintain global civilization is absolutely vital to avoid mass starvation. There is nothing that can reform this system except around the edges.

    Modern AG will be our ultimate suicide delivery system if NUK war does not get us. Permaculture is a vital alternative but it is only a niche. It is a vital niche and our only hope but not a solution to overpopulation and over consumption. If anyone survives the coming bottleneck they will be using permaculture by default.

    Blaming roundup is like blaming guns on gun violence. It is our food system itself that is to blame and I will venture to say about everyone one of you reading this enjoys and relies on that system. We are screwed, blued, and tattooed in this regards. We have no alternative but to ride the ship down an energy gradient of which industrial agriculture and our global world are a part of. Energy and complexity allow roundup and it will end round up. Without chemicals you do not have modern agriculture and you do not have civilization. It is as simple as that. Bitch all you like about roundup as you eat your pork sausage and eggs.

  17. JuanP on Mon, 30th Nov 2015 7:20 am 

    The bee die off is clear, undeniable evdence of how sick, selfish, ambitious, stupid, ignorant, and primitive we human beings are. The bees are being starved, poisoned, and traumatized to death by over harvesting, pesticides and herbicides, and long distance transportation to maximize profits.

    Let the bees live in one place, go organic, and don’t take too much honey from them and they will be fine. Unfortunately, the vast majority of humans are incapable of taking these easy steps because they want to consume more and have too many children. YOU CAN’T FIX STUPID!

  18. JuanP on Mon, 30th Nov 2015 7:31 am 

    In his criticism of people blaming Roundup, Davy is missing the point. It is not the agricultural system that we should blame instead and needs reform, Davy, it is human beings that are responsible. Unfortunately, there is no reforming us. We need to focus on living in the present, the future is screwed.

    YOU CAN’T FIX PEOPLE!

  19. Davy on Mon, 30th Nov 2015 8:20 am 

    Sure Juan but humans need to eat. Is there anything more basic than food and water? There is nothing deeper than food. It goes to the very heart of who we are and our connection to mother earth. If you want to criticize humans the best place to start is food because it is food that lead man down the path of civilization. Everything we are today grew out of our tendency towards food production. This is ultimately the path of death through a bottleneck that we appear to be approaching.

  20. Dredd on Mon, 30th Nov 2015 8:35 am 

    The circus is in town (Paris Climate Change Conference Begins).

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