Mining, a tool against poverty

Many countries around the globe with the richest mineral resources are categorized as the poorest countries, but they are actually a lot richer that we have never imagined. Countries as Angola, Ghana, and Tanzania have this highest gold and diamond reserves, but at the same time they are considered ones of the poorest countries. If done right, mining can bring a lot of investment and help the local economy, bring education, transporting and infrastructure. As you may know, this is not the case; most of the mining done in Angola is done my mobs and their slaves to get that so called "blood diamond." Mining has to be seemed as way to help poor communities instead of an industry of environment-destruction, nobody is denying that mining is very polluting, but if data is collected, and they are regulated and observed they can bring needs for poor communities as infrastructure and education while it helps the mining industry of reaching the profit wanted.

A lot of people are ignorant of the fact that mining can help the poor and not just to pollute the environment. I won't lie, most of mining companies will pollute the environment because it is a lot cheaper and less time and money consuming than trying to find ways to be eco-friendly. Mining is more like a tool, since by itself it causes destruction, pollution. Government can regulate mining, so they will have to find ways to be eco-friendly, at the same time; these governments can tax mining companies and used this revenue for project that will improve the life of the average citizens. Mining creates jobs, for every job created directly in mines, between 2 and 25 jobs are created with second party companies. Mining creates infrastructure, let's put it this way. A mining company has discover a very rich mineral reserve in the middle of the Amazon forest, the government agreed with the company to mine the specific site, but they must be eco-friendly, now that this company has gotten permission, they will have to get there and for that they will build roads or improve them to be able to transport those minerals. Once the mining site gets established, they will need water and electricity and guess what, they will also build water and electric systems. Now this company needs workers, and who are better workers than locals that will work for less than from workers from another region. Now that they got them workers, the company has to train and educate them. Now we have water and electricity supply in this remote community in the Amazons, education, and jobs. The locals will enjoy all this services and now they will be able to do other kind of business like growing and selling coffee. They will use the water and electricity to grow their crops, they will be educated, so they will maximize their profit and goods produced, and they will also be able transport their good, export their coffee.

To be honest all mentioned above can happen under ideal circumstances in which everything is done right. Mining companies by themselves will only pollute the environment and make the economy of a country worst. Mining can be used as a very powerful tool against poverty. The government and the people, local people, have the power to use this tool. The reality is that this tool is usually miss used and it usually finished evolve in corruption. I hope that a day in which corrupts governments will be reformed and mining will be used right to help the poor and not to destroy the environment.  

Why does gasoline cost so much?

I`m sure that when people regularly walk by a gas station they wonder why does the price of gasoline changes so often and many people keep asking themselves why does the price of gasoline have been going up, but it never goes back down significantly. The often variations of gasoline prices is due to the constant change of demand and supply and the gasoline price usually doesn't drop because the supply can`t match the demand.

The price of gasoline is directly affected by the laws of demand and supply which state that as price goes up demand goes down and as price goes up supply goes up. There are multiple factors affecting the demand and supply of crude oil which is directly affects its derivative, gasoline. Government regulations and taxes usually have high taxes for oil of which is usually a 15% of the display price on the gasoline stations. Other factors as natural disasters also have a great effect on the pricing of oil. For example, The hurricane Katrina, destroyed numerous oil drillers in the Gulf of Mexico and that caused a increased on the price of gasoline because the supply had gone down and the demand hadn`t change, so prices had to go up to reach a new equilibrium.

The law of demand explains that as prices goes up, demand goes down, but gasoline does not necessarily follows this rule as we have been experiencing. I know, as the price of gasoline has been going up the demand has also gone up. This happens because the worldwide demand for oil has increased significantly. On 1984 a gallon of gasoline could be bought for $.25 but in 2005 the price of gasoline had raised to $2.86 in 2005, so in 21 years gasoline price rose for about $2.60. As other countries in developing had increase their demand for crude oil and this has affect greatly the price on gasoline worldwide. For example, in the last 10 years the amount of cars in Lima has triple and that has greatly increased the demand of oil. As Lima and as many other countries have gone through the same, demand has greatly increased, but the supply haven't be able to keep up to reach a equilibrium where the prices would be considered affordable by most of its consumers.

I would say that a high price in goods such as oil is good because that motivates individuals and firms to get into the market with a product able to substitute oil and people would be push to be motivated towards new technology that could be friendly environment, but if the price of oil was to be lowered, the demand would increase greatly and the supply would go down because of the lack of profit motivation from firm to supply oil and there wouldn't motivation either to create new products that would substitute oil successfully. 

Mining, an industry more about public relationships than minerals

Mining is an industry dedicated to the extraction of natural resources and here is where everything starts. Mining companies usually have to pay royalties to governments which are some kind of taxes that they pay based on their profit and the amount of minerals extracted from the ground. Mining companies usually face environmental regulation enforced by governments, this is done so the land won't be poisoned or polluted.  Mining companies usually spend a great deal of money and time in accomplishing all these regulations. Governments play a huge role in the amount of mining investors, because of the royalties; mining companies will decide whether to invest in a certain place or not based on the royalties that they will have to pay. Also, the ownership of the mineral which is determined by the governments plays a huge role in whether mining companies will invest or not. Also, mining companies tend to stay away from unstable governments because the government could take over the mining place and it would be a huge lost for the company. In other words, mining companies will only invest where the government is friendly a reasonable. Demonstrations are another factor that affects the mining companies because usually people living in the surrounding areas of the mining camps will demonstrate to get some good or service from the mining company. For example, a mining company comes to this place and they do their studies on the land and conclude that it is rich in mineral recourses, then they have to apply for permits from the government to extra the mineral, then they have to invest huge amount of money in environmental regulations, make happy the people in the surrounding areas by offering services like roads, water system, jobs, etc. And finally they have to pay royalties to the government. In other words, the mining companies have to give a ton benefits to people and entities that won't help them more profits. It looks unfair for mining companies but they help a lot of people and still make profit. In other words they work more in public relations than in extracting minerals because they usually focus on pleasing everybody that can harm their business directly or indirectly and after they have accomplished that goal they can start to extract those precious metals.

Chris`s intro to econ

Hello, this is Chris Hood from the econ class in ISCL and this is my first time posting a blog. I would like to learn in the econ class how the values of metals are affected since I want to major in mining engineering. I usually see a lot price changing in different kind of metals. I have a basic idea of that, "demand and supply." That is pretty much I know about metals price and when they change. I was thinking that our world economy will always have a high demand for metals since a lot of essential things for business and everyday use are made out of metal, so the demand will be always be high, and I guess that it will keep the industry of mining stable or if the demand gets higher, will be even better, that means more profit to the mining industries and its workers. In other words, if I join the mining industry I won't have to worry of becoming a taxi driver because the mining industry is not doing well. This is all based on my limited knowledge about economy and off course it could change and it is one of my goals in this economy class, to learn more about the decision that our society will be making that will have an effect on the mining industry. By the way, I`m a senior at ICSL, I'm 19 and I'm from Panama.