It is common knowledge that oil discovered today, or that is newly allowed to be developed, such as in the Alaskan National Wildlife Refuge (ANWR), has no effect on prices until that oil hits the market. However, economic theory does not support common knowledge on this issue. When the future...

Alchian and Allen’s “third law of demand” states that as a fixed cost increases by the same amount for low- and high-quality goods, the ratio of the prices of high- to low-quality goods will fall and the quantity demanded of high quality goods relative to low quality goods will increase....

The Effect of Opening up ANWR to Drilling on the Current Price of Oil R. Morris Coats and Gary M. Pecquet