Tougher Sanctions

2/6/2012

The U.S. government has decided to implement new sanctions on Iran. What this means is that the government has decided to stop demanding certain goods that come from Iran (mainly, oil) as well as limit the supply of US goods to Iran (property). What larger effects do you think these sanctions will have in the input/output markets? Are Americans helped or hurt by these sanctions?

Consider the following scenario: US households currently supply land to the input market. After the sanctions there are less demanders because Iran can no longer exchange money for land in the US input market. Could this be shown using a demand graph? What do you expect will happen to the price of land if demand decreases but supply stays the same?

R10455834

2/7/2012 10:28:19 am

I think in the case of land and in most circumstances the price would drup if demand declined and supply remained stagnant. However in this case the decrease in demand is artificial because, as everyone knows, the US and global demand for oil and gas continues to rise. I doubt with the global demand soaring Iran will have any problem finding markets. Although the intentions are noble they could possibly force US consumers to pay more for gas.

Wesley Quigley

2/7/2012 03:22:19 pm

I agree. There is definitely no real way to stop this demand. No matter what the government says, America needs oil, and Iran has a lot of it. I guess Americans will just have to spend a huge buttload on oil while other countries take advantage of a lower price on it because Iran will be producing a lot more oil than it will be distributing.

Travis McCollum

2/9/2012 05:22:35 am

Wesley you make a good point, America uses oil for everything from day to day necessities to the majority of it's industries. These sanctions will do nothing but cause the prices of oil and gas to increase. I think that the U.S. needs to look in other areas such as Alaska where they are currently trying to build a pipeline to transport oil.

Robert Ainslie

2/9/2012 05:08:29 am

In this scenario I would say yes a demand graph could be created. If the demand increases then economically the only thing that can possible help is lowering the prices. The problem with this in this situation is Iran has some of the biggest oil reserves in the world. No matter what, the US is going to have to buy an sell products to Iran. Economically we don't have much choice unless we're aloud to drill in Alaska on the reserve.

Aaron Workman

2/9/2012 07:02:57 am

Americans may be hurt by these sanctions because we may have to start paying a lot for oil but if the government sticks to the sanctions and continues to not do business with Iran, we may in the future have to drill in Alaska to get oil. And in that case the price of oil would drop a substantial amount.

R10433679

2/9/2012 01:10:54 pm

I believe that us americans will not be hurt by these new sanctions going into effect because we always find ways to get what we want and need. We might hurt at first because we are loosing a supplier of oil and our oil prices will go up but then we will soon rely on our many other suppliers that supply americans with oil.

R10403506

2/9/2012 02:03:35 pm

I agree with your comment. We will be slightly effected I guess in a way but it's not going to hurt us. Oil prices might attempt to go up but will eventually go down due to the fact that people will purchase less gas. We'll adapt.

R10425881

2/9/2012 02:30:05 pm

I agree with you, Canada is still the largest exporter of oil to America. Prices may go up, but they would eventually go down, especially since we're finding alternatives to oil.

R10435313

2/9/2012 03:36:56 pm

I think youre right that a solution will come up. Depending on political leverage on their oil suppliers, the US might make some countries deliver more oil in general to keep the oil price stable, if need be. In the short-term there can be only losers from the effects of an embargo on Iran, though I don´t think it weighs on the US, as the oil problem can easily be solved. Lets see if something good will eventually come out of this.

R10358457

2/9/2012 02:07:47 pm

the short term loss will have an impact, the long term loss could have draw back as well or a new supplier could be found for losing the land profit from Iran I feel like that won't set us back that much

10363181

2/9/2012 02:39:53 pm

As to some of the comments above we are AMERICA (saying it like the song) we did not get to where we are today buy just settling for OK or average. Yea prices may go up but as Americans we will find a alternative that better and cheaper ultimately making us an even stronger country.

10326602

2/9/2012 03:35:47 pm

I see this as The United States way of being a hardass by creating this embargo against Iran's oil and getting other countries involved. Iran will have to struggle so severely until there is no other option other than to face their issue. It's either make more income and spend it poorly, or have a dramatic decrease in sales and be even more deep in. The U.S. will get hurt at the same time because the oil will be more expensive elsewhere, but by doing so America is sending a strong message of what they want done.

R10352332

2/16/2012 08:12:57 am

As long as the UN is enforcing these sanctions, we all have nothing to worry about. Money in this country is what the United Nations makes it, and theres plenty of oil coming from places outside of Iran. Would I rather live in a world in which I'm paying $3.75 a gallon or in which a place like Iran has nuclear weapons? Keep the sanctions coming

Alfredo Galvan

2/16/2012 10:14:10 am

The sanctions will definitely hurt our budgets if the government decides to the sanctions. But there is no need all we have to do is invade Iran, take out their nuclear power and restructure their government like we did with Iraq. It will definitely help the economy since it became addicted to war, and they can pay us back the interests and fees with oil.

R01953976

2/16/2012 10:20:03 am

And while we are at it we should also invade Venezuela that way we insure our grandchildren’s future.

r10413789

3/6/2012 01:12:13 pm

An increase in wealth due to land profits will occur, but a decrease in oil supply will cause prices to go up and profit to go up as well because it is an inferior good. US government won't be affected, but its citizens will.

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Tougher Sanctions

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