Externalities in Business Economics and Oil Industry Essay

Externalities in Business Economics and Oil Industry - Essay ExampleThe demand for oil is unlimited where the submit is limited. Consequently, the demand has continued to exceed the supply (Cashin, 2012, p.48).Externalities in economics refer to effects the consumption of a product or service has to third parties. It is to a fault known as spill-over (Hanson, 1974, p.39). The consumption of oil is known to have externalities in that it ca employs environmental pollution. The gases emitted by vehicles and from industries are known to be harmful to the environment. The pollution has resulted in diseases to human beings and has caused climatic changes. The changes in climate have had far-reaching impacts on the society by causing droughts which have subjected people to poverty and hunger (Hidden costs of energy, 2010, p.70).The judicature has a role to play in curbing the externalities resulting from the consumption of oil. First of all the government can compel the huge consumers of oil to try and use green energy that is less harmful to the environment. Moreover, they should place a fee on the large consumers of oil who pollute the environment in order to abet the third parties affected.