An article in BusinessWeek reported the discovery of a new processing technology that makes it economically feasible to turn natural gas into a liquid petroleum that yields superclean gasoline, diesel fuel, or any other product derived from crude oil. This discovery represents 770 billion barrels of oil equivalent, “enough to slake the world’s thirst for oil for 29 years.”
a. Using demand and supply analysis, explain why this new process will not cause a surplus of crude oil. If no surplus is created, then what will be the impact of this process on the market for crude oil?
b. Had this process not been discovered, explain why we still would have had “enough” crude oil to meet the growing worldwide demand for crude oil.