|Question||Many people are concerned that production of petroleum has peaked; people will have less petroleum available to them from now on.
(a) If everyone has perfect knowledge of world petroleum and production has indeed peaked, what do you expect to happen to the price of petroleum over time, if demand stays constant or increases?
(b) How do you expect people to respond to the price trend you identified in (a)? Will this response make future oil scarcities more or less of a problem?
(c) In fact, people do not have perfect knowledge of world petroleum It is possible that more oil exists than is currently known; it is also possible that some known may not be developed, due to costs or environmental problems. How might these uncertainties affect the responses you discussed in (b)?