Oil Gas Industry Alberta Hightech Industry California Stability Economics Essay

Oil gas industry is the anchor Alberta ‘s economic system. Petroleum industry developed in Alberta chiefly because oil and gas minerals are of course found here. The natural gas was foremost discovered in southern Alberta in late 1800 ‘s before Alberta was even a state. Oil and gas industry is active throughout, nevertheless it is more concentrated in some parts than others.

Other than the geographics, high demand for crude oil merchandises in USA and favourable authorities policies played major function in development of oil & A ; gas industry in Alberta. The close propinquity of Alberta to the biggest oil market in universe has been immense advantage to the oil industry located in Alberta. For US consumers, it costs manner less to transport oil and Gas from Alberta than other manufacturers such as Saudi Arabia. Besides, Alberta is much more concern friendly and politically stable than other oil rich parts of the universe such as Middle East. Additionally, the Alberta authorities policies have instrumental in development of the industry. Historically, the Alberta authorities has charged lower royalties for geographic expedition rights compared to other states in the universe. The political stableness combined with low royalty rates have made Alberta really attractive to companies that want to guarantee safe return on their investing. Due to recent downswing in economic system, Alberta Government has farther slashed the oil and gas royalties to safeguard occupations.

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Alberta became a hub of Canadian oil and gas sector because oil and gas are of course found here. The enormous growing in this industry is fuelled by of all time increasing planetary demand for crude oil merchandises. The industry was further aided by Alberta authorities policies that made it comparatively easy for companies to setup concerns here. Clustering of oil and gas related concerns in Alberta are an unintended consequence of economic activity. Once the oil and gas extraction started in Alberta it was natural for other secondary industries such as rig fabrication, heavy machinery companies and technology houses to setup stores near to where there is demand for their services.

The hi-tech industry in San Francisco Bay Area, California, started in early 1900 ‘s. In 1909, Charles Herrold started the first wireless station in the United States with on a regular basis scheduled scheduling in San Jose. In earlier yearss US defense mechanism section supported all the hi-tech occupations in the Bay Area. A figure of engineering houses had set up store in the country around Moffett Air Field to function the Navy. After the WWII, batch of soldiers returned to universities to go on their surveies.

To turn to the fiscal demands of Stanford ‘s growing demands, and to supply local employment chances for graduating pupils, Frederick Terman proposed the leasing of Stanford ‘s lands for usage as an office park, named the Stanford Industrial Park Leases were limited to high engineering companies. This was a beginning to hi-tech revolution that took topographic point over following five decennaries and helped transform the agricultural economic system of Bay Area into international hi-tech human dynamo known as Silicon Valley today. Stanford University research labs served are incuberator fot new thoughts and innovations that were subsequently turned into successful concerns. All the large companies that we know today such as Intel, Hewlett-Packard, Apple, Cisco and Sun Microsystems were started by the alumnuss from Stanford Universtiy or are a indirect consequence of thoughts that were originaly formed in one of its research labs. It was the matrimony of invention and entrepreneurial spirit that lead to success narrative of the Silicon Valley.

2. There are many benefits to the oil and gas companies that may be sing of holding presence in Alberta. The first obvious benefit is that oil and gas minerals are abundant throughout Alberta. Second, Alberta has low corporate revenue enhancements and lower oil and gas royalty rates compared to other oil bring forthing parts of the universe. These authorities policies lead to higher net incomes for concerns. Alberta besides has a strong, stable & A ; democratic political system which does non present any menace of authorities intercession such a nationalisation of natural resources in Venezuela.

Oil and gas sector have provided many employment chances for people of Alberta. Until late there had been had been high demand for skilled and unskilled workers and wages are by and large high across the board compared to rest of the state. Besides due to the income from royalties, Albertans do n’t hold to pay provincial gross revenues revenue enhancement. However agglomeration besides has some drawbacks. Generally companies that are straight involved in oil and gas geographic expedition and extraction, benefited from the pooled resources and transportation of cognition. However, concerns those autumn outdoors agglomerative economic system such as general retail & A ; nutrient services find it difficult to fit rewards that are paid by oil and gas sector. Agglomerate economic systems by and large are individual tracked and lack diverseness. These types of economic systems go through roar and broke rhythms as the demand for their merchandises and services goes up and down. In roar times companies have difficult clip retaining staff, whereas in lag people by and large have to re-train in some other field since their old accomplishments become excess.

Boom rhythms besides cause lodging deficits. In Alberta, during 2005-2007 the lodging monetary values doubled. Now with mean house monetary value around $ 370,000 makes it really hard for first clip purchasers to acquire into the lodging market. For authorities a drawback to this type of economic system is that when the monetary value of Oil goes down times are tough. Recently, when the monetary value of oil dropped, the Government of Alberta had a tough clip with disbursement. The Alberta Government had no job disbursement big amounts of money when times were good, no 1 questioned where the money went because there was so much to travel around, but when oil monetary values went down and the royalties coming in were non what they used to be everyone had an sentiment about what needed to be spent and where. Additionally, when the monetary value of oil goes down there is less geographic expedition so many layoffs occur, an issue for those that are laid away and the authorities who has to pay more in unemployment benefits.

In the mid- to late 1990s several successful computing machine engineering related companies emerged in Silicon Valley in California. This led anyone who wished to make a startup company to make so in Silicon Valley. The rush in the figure of Silicon Valley startups led to a figure of venture capital houses relocating to or spread outing their Valley offices. This in bend encouraged more enterprisers to turn up their startups there.In other words venture capitalists ( Sellerss of finance ) and dot-com startups ( purchasers of finance ) “ clustered ” in and around a geographical country.

The bunch consequence in the capital market besides led to a bunch consequence in the labour market. As an increasing figure of companies started up in Silicon Valley, coders, applied scientists etc realized that they would happen greater occupation chances by traveling to Silicon Valley. This concentration of technically skilled people in the vale meant that startups around the state knew that their opportunities of happening occupation campaigners with the proper skill-sets were higher in the vale, therefore giving them added inducement to travel at that place. This in bend led to more hi-tech workers traveling at that place.

3. “ Silicon Valley ” has been a globally recognized centre of technological invention since the 1970s, when engineering houses engaged in semiconducting material fabrication, computing machine design, and computing machine scheduling and services symbiotically clustered in the southern part of the San Francisco Bay Area. The Si in Silicon Valley refers to the cardinal ingredient of semiconducting materials, which formed the proficient footing for the computer-based high engineering economic clime that grew up environing San Jose, California, which is in Santa Clara County. This country and that industrial base attracted venture capitalists, computing machine engineers, and enterprisers to make a regional agglomeration of hi-tech houses that spread into neighbouring Bay Area counties ( specifically, Alameda, Contra Costa, San Francisco, San Mateo, and Santa Cruz ) and made Silicon Valley synonymous with technology-driven growing. ( See map 1. )

From the mid-1990s to 2001, the new Internet sector, along with its related hi-tech industries, quickly grew, due in big portion to widely available venture capital, and created a new moving ridge of growing in Silicon Valley. Stock markets, such as the NASDAQ on which many hi-tech corporations are listed, experienced immense runups in stock monetary values. In March 2000, the NASDAQ reached a extremum of 5,132.52.By December 2000, the NASDAQ had dropped by more than 50 per centum and stood below 2,500. Despite such a monolithic hit to the market capitalisations and fiscal projections for hi-tech houses, employment in the Silicon Valley was stalwart in the early portion of 2001. Santa Clara County ‘s unemployment rate stood at merely 3.0 per centum in January 2001. Nevertheless, the aftershocks of the 2000 stock market clang and the oncoming of economic recession in March 2001 resulted in a sudden contraction of the Silicon Valley economic system. As the bubble explosion, Santa Clara County ‘s unemployment rate jumped to 7.0 per centum by the terminal of 2001, and the part ‘s hereafter as a melting pot of invention appeared in uncertainty.

Following the 2001 economic downswing, hi-tech industries in the Silicon Valley recovered at a slower rate than in the remainder of the Nation. Some hi-tech companies responded by relocating certain stages of production elsewhere or traveling from the Silicon Valley wholly to countries with lower commercial rents and lodging costs. [ 4 ] By 2004, though, hi-tech employment began to bounce in the Silicon Valley, and by 2008, some hi-tech industries like aerospace, pharmaceuticals, and scientific research had added plenty occupations to transcend their pre-recession employment degrees. Despite the marks of growing in recent old ages, Silicon Valley high-tech industries overall employed 17 per centum fewer workers in 2008 compared with 2001.

Alberta is a major economic factor in Canada. The oil and gas industry makes a great trade of money for both the Federal and Provincial Governments. Bringing in money through oil royalties makes it possible for the authorities to maintain revenue enhancement rates low and disbursement on roads, diversion centres, and other things that the populace want up. The population of Alberta has been turning at a high rate. Over the last 10 old ages the population has grown by around 750,000 people. In 2001 the population was 2,974,807, in 2006 the population was 3,290,350, in 2009 the population was 3,632,483 and the estimated population in May 2010 was 3,724,800 ( hypertext transfer protocol: //www.statcan.gc.ca/ ) . A great trade of the population in Alberta lives in the Edmonton Calgary corridor. This country runs along hi-way 2 and includes the City of Red Deer and many other smaller towns. There are many oil and gas companies located in these centres. Downtown Calgary is home to most of the caput offices for the Oil companies and Edmonton is home to the refineries. Nationally, people are affected by the oil industry in Alberta, there are people populating outside of Alberta but winging to and from Fort McMurray to work at the oil littorals, there are people utilizing the fuels created in Alberta, and people throughout Canada benefit from the money brought in by authoritiess because of the oil and gas industry.

The agglomerative economic systems of both Silicon Valley and Alberta created an inflow of people to their several countries. Both economic systems followed similar flight in footings of employment growing and pay additions. In both economic systems rewards increased dramatically because of the competition between employers to acquire skilled workers. The national importance of the oil industry is incontestable because of the income brought in to people and authorities and the usage of the resource throughout Canada and the universe. Silicon vale continues to be hotbed of invention in electronics and leting US to keep its lead in invention and entrepreneurship.

Part 2: Stability in Equilibrium

1. The skateboard stores on 4th Avenue, the out-of-door stores on West Broadway and the photocopy centres on West Broadway are non examples agglomeration economic systems. It states on page 4.4 of the “ Urban Real Estate Economics ” text book that “ agglomeration economic systems are the consequence of positive outwardnesss between houses: each house in the bunch or metropolis has some characteristic or takes some action that is good to other houses. ” In the instances of the illustrations above it does non look that one store brings a similar store all that much benefit such as cognition or cost film editing that would do it an agglomeration economic system. The lone significant benefits I can by the bunch of these concerns is that if person visits one of the shops they are likely to see all of them, so they are now pooling their patronage.

The illustrations below show bunch of concerns in Edmonton Alberta.

The first illustration is a bunch of auto franchises along 34th Avenue. There are 11 franchises all with 15 blocks. The benefit for the traders is that if person is shopping for a vehicle so they are likely to see more that one of the franchises. They may hold come to the country to see one specific trader, but now that they have arrived they will see some others to see what else is out at that place. The consumers besides benefit because they will cut down their transit costs sing a figure of franchises in the same country.

The 2nd illustration is a bunch of eating houses in the hundred-and-seventieth Street country. There are 11 eating houses ; all sit down dining, located within a really little part. They are clustered at that place because of the shopping in the country. Once people are finished shopping for the twenty-four hours or they are in the center of their shopping they do non desire to travel place and do a repast. Locating themselves along chief arterias, near shopping and stopping point to other attractive forces helps the eating houses to convey clients in.

2. Harold Hotelling ‘s theory in “ Stability in Competition ” is non related to agglomeration economic sciences theory. Agglomeration economic sciences states that concerns locate near each other because they will see positive outwardnesss. The theory in “ Stability in Competition ” states that houses locate near each other because it is the best location for them and they will lose clients if they locate elsewhere.

I think that Hotelling ‘s theory has merit when it comes to certain concerns ; nevertheless, Hotelling based this theory on a market with a fixed monetary value and vouch ingestion degrees. I think that certain concerns will constellate every bit long as there is an economic benefit to making so.

There are illustrations of constellating like what Hotelling negotiations about everyplace.

One illustration can be seen in topographic points where there is a medi-centre or walk in clinic. If you see a medi-centre you will besides likely see a pharmaceutics. Both concerns operate around “ medical specialty ” but are differentiated and this difference allows for benefits to be gained by both. Both concerns will feed off the traffic generated by the other without direct competition. Currently in Edmonton there are medi-centres located right in apothecary’s shops.

Another illustration can be seen in the instance of fast nutrient eating houses turn uping near gas Stationss. Drive through any town or metropolis on a major roadway and you will probably happen a gas station located by a fast nutrient eating house. Both concerns operate for people go throughing through. Locating beside or at least near on another aid to capitalise on traffic generated by the other without viing, both concerns are likely to be visited by the same individual or vehicle because when going less Michigans is better.

3. By and large, I think that houses that cluster together experience more competition and may see lower monetary values. If a house chooses non to take down its monetary values in the name of competition so they will necessitate to add excess services so that people can warrant paying more for a merchandise. In either instance concerns will hold to be competitory in order to maintain clients and derive new 1s. Agglomeration says that the concerns benefit from being around each other ; profit frequently taking to an increased net income. This is non true in the instance of clustered concerns that are non portion of an agglomerative economic system. A concern that has to take down monetary values or add excess services will probably be taking a net income cut.

4. I think that there a figure different grounds why concerns bunch. One ground for concerns to bunch is because their clients will be in that country. For illustration, in my 2nd illustration above sing the clustered eating houses, I think that they are clustered at that place because of the shopping in the country. Once people are ready to take a interruption from shopping there is a high likeliness that they will travel out for a repast. Locating near shopping brings those people from the shopping centres into the eating houses. If a eating house is located off of the chief streets and off from major centres it is likely that eating house will non have as much attending as these eating houses. Another illustration of this same thought is one I have seen in a more run down country of Edmonton. Along Stony Plain Road the country is somewhat neglected and derelict ; there are many rental adjustments and lower category lodging in the country. I have found that there are many “ payday loan ” types of concerns located on or around Stony Plain Road. These concerns locate in the country because it is where much of their patronage is situated, it would non do sense to turn up in an country where they would non be seen by they people they are seeking to pull.

Another possible ground why houses bunch is because the bunch brings in more clients and enhances competition. In the illustration of the auto dealerships that I noted supra, if person is shopping for a vehicle on 34th Avenue so they are likely to see more that one of the franchises. They may put out to the country to see one specific trader, but one time they arrive it is likely that they will see some others in order to find whether or non they are acquiring a superior trade. Competition is a major component in the concern of selling autos, there is a great trade to take from. Hence, auto traders enjoy being located near other traders them to maintain competitory with each other. It is common for car traders to be located within a short distance from one another ; this tells me that constellating is good for their concern.

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