businesswillwaterbecomemorevaluablethano
Business
Will water become more valuable than oil ?
Will water become more valuable than oil?
My simple economic equation that determines the value of things is value = scarcity of resources. There is an old Chinese saying that things are valuable because of it’s scarcity. The lesser the supply of a thing, the higher the value it will be and vice versa. When we need air and air is in abundance, it in a sense will have no value. This is the same as water. Water is so valuable when you are in the dessert but becomes cheap when you are near the river.
This, sometimes, has nothing to do with the intrinsic value of the thing itself. Diamond is so valuable not because it has much value by itself. It is purely the scarcity that drives the value up. Do we really need diamond to wear as a ring or necklace to survive? It is certainly "No". Or would diamond still be so valuable if the supply increase by a million folds today. The answer is too "No".
Water is so important to our survival. Our body is made up of almost all water. We will probably die out of water in a few days. But why water is cheaper than Wine or a can of Coke. This is because there is plenty of water around.
Remember the world is made up of two third in water. Worst to the worst, we can squeeze out potable water from the sea through desalination or any other technique at a cost. Australia and USA are in some kind of project to recycle sewerage water for drinking. And as long as the cost to produce water is less than oil, the value will still be less. My economic value equation of value = scarcity of resources will still rule.
Oil was dirt cheap once. It costed only a fraction of it does now few years ago. A liter of gas from a gas station was only US$ 0.25 in 2003. It is almost a US Dollar now. Again, it is the economic equation of value = resource scarcity.