As the special consultant to the President, you have been asked to evaluate the economic impact of four options and make a specific recommendation for what the country should do. The options are:
Option 1: Stop pumping until the market price reaches at least the extraction cost of $50 a barrel.
Option 2: Keep pumping to provide some cash flow.
Option 3: Sell offshore licenses to private international companies, which would pay a royalty of $15 per barrel with all extraction costs borne by the licensees.
Option 4: Prepare a bond to finance entry into the leisure market with high-end hotels, casinos and entertainment venues. Although this would restrict drilling operations to southern half of the island, the northern end of Petrolo could become a magnificent tourism venue for the world’s wealthy. Tax-free operations for the first ten years of operations for major hotel/casino operations would entice investment.
Assignment
Prepare a 4 – 6 page paper that uses 2 or more sources, adheres to APA standards and addresses the following:
For each of the four options, identify three (3) potential economic impacts considering both possible benefits and downsides and implications for Petrolo’s government and citizens.
Based on your analysis and research, make one or more specific recommendations to address the issue.
