Tag: shortage

The government has been under a lot of pressure to tackle the culture of binge drinking. Figures for 2006/7 show that the cost to the NHS of binge drinking was £2.7 billion per year. In response, MPs are calling for a change in government policy towards the alcohol industry, arguing that at present the drinks industry has more control over policy than health experts. So what can be done?

In a report published in early January 2010, the House of Commons Health Select Committee proposed a minimum price per unit of alcohol, tighter controls on advertising and mandatory labelling. A minimum price, the Committee argued, would reduce demand by heavy drinkers who are looking for cheap alcohol. At present, many supermarkets have promotions that involve selling cider and beer at below cost, allowing people to ‘pre-load’ cheaply at home before going out drinking. The report suggested that a minimum price of alcohol of 50p per unit would save more than 3000 lives per year and a minimum price of 40p per unit would save 1100 lives.

Dr. Richard Taylor, an independent MP and member of the Commons Health Select Committee, said:

“The evidence we took showed that minimum pricing was the most effective way forward and at the moment you can sometimes buy beer cheaper than water. Our message is that the price would be put up but only by a little for moderate drinkers. Surely that is a sacrifice to pay for the good health of young people.”

However, those opposed to setting a minimum price per unit of alcohol argue that it would be unfair on moderate drinkers, that it wouldn’t work and that it could even be illegal. Instead, they argue that that government intervention needs to be smarter. It should not target everyone, but solely those groups consuming the most alcohol. The British Beer and Pub Association suggests that 10% of the population consumes 44% of all alcohol.

It appears that the government won’t be following Scotland’s minimum price on alcohol, but will instead impose bans on all-you-can-drink deals and introduce compulsory identity checks. However, supermarket deals don’t appear to have been targeted. Successive governments have failed to tackle this problem sufficiently, but with an election approaching, will this be a proposal that is promoted?

Raise alcohol price to save lives, MPs argue Telegraph, Rebecca Smith (8/1/10)
Commons committee backs minimum alcohol pricing BBC News (8/1/10)
Campagain to tackle cut price alchol The Arran Banner (8/1/10)
Wyre Forest MP calls for alcohol minimum pricing The Shuttle (8/1/10)
Should 50p be minimum price for a unit of alcohol? Have your say BBC News (8/1/10)
BBPA: minimum price would be ineffective Morning Advertiser, Ewan Turney (8/1/10)
Cost of binge drinking doubles for the NHS rises to £2.7 billion Mirror, James Lyons (2/1/10)
Bring in 50p minimum price for alcohol, MPs urge Guardian, Toby Helm (3/1/10)
All-you-can-drink pub offers facing ban BBC News (19/1/10)
Too much of the hard stuff: what alcohol costs the NHS THE NHS Confederation, Issue 193 January 2010
Minimum pricing for alcohol essential, says Health Committee Marketing Week, David Burrows (8/1/10)

Minimum alcohol pricing ‘will affect the poor’ BBC News, Kevin Barron and Gavin Partington debate (8/1/10)

Questions

  1. How is the equilibrium price of alcohol determined?
  2. Illustrate and explain the effects of the imposition of a minimum price.
  3. To what extent is a minimum price likely to be effective? How is elasticity likely to play a role in the effectiveness of such a policy?
  4. Why could the introduction of a minimum price on alcohol be illegal and contravene European competition law?
  5. What are the arguments for and against a minimum price on alcohol? Explain how and why some people will gain and others will lose.
  6. How would a minimum price on alcohol affect government spending? Would more investment in prevention lead to a lower cost to the NHS? Explain your answer.
  7. Why might bans on all-you-can-drink deals be ineffective?

Oil affects our everyday lives. Whether it’s to heat your house, to run your car or to work out production costs, the price of oil is important. Commodity prices are determined by the interaction of demand and supply and oil prices are no different. As demand and supply for products and for oil itself change, so will the price of oil. However, any changes in the price of this valuable commodity will also have effects on macroeconomic variables, such as inflation. From a high of $147 (£90) per barrel in July 2008, it fell to $30 by the end of the year. But since then it doubled to reach $60 by May and has been around the $70 mark since.

How have these fluctuations affected the economy? Should more be invested in extraction? Extracting oil is an expensive process and requires huge investment, which is problematic given the current recession and various funding issues. The following articles consider this problem, as well as the impact it is likely to have on our economic recovery.

Total issues oil shortage warning BBC News (21/9/09)
Crude price ‘shock’ is next threat to recovery The Independent (22/9/09)
Oil prices slide on demand fears BBC News (21/9/09)
Pound drops as UK stocks fall for first time in seven days Oil-price.net (22/9/09)
Oil prices tumble amid worries over weak demand Channel News Asia (22/9/09)
Oil price touches high for 2009 BBC News (21/8/09)
FTSE soars over surge in oil prices The Press Association (21/9/09)

Oil price data can be found at:
Brent Spot Price (monthly) Energy Information Administration.
Note: you can select daily, weekly, monthly or annual data, and data for other oil markets too. Data can be downloaded to Excel.

Questions

  1. How is the price of oil determined? Why is it so volatile? How is price elasticity of demand relevant to your answer?
  2. Over the coming ten years, which factors are likely to affect (a) demand for oil (b) supply of oil?
  3. Explain whether the price of oil is likely to rise faster or less fast than general prices.
  4. How do changes in the price of oil affect the government’s macroeconomic objectives and its policy decisions?
  5. Explain why the price of oil is such an important consideration for firms