April 10, 2002

HOT COMMODITIES IN TURM-OIL?
Using Oil as a Starting Point to Learn about Commodities Trading

Grades:  6-8,9-12

Subjects:  Economics, Social Studies

Related New York Times Article
"Mideast and Venezuela Turmoil Sends Oil Prices Into Wild Swing, By NEELA BANERJEE", April 10, 2002

Overview of Lesson Plan:: In this lesson, students learn notions of "supply and demand" and "scarcity" by acting as commodities traders on the floor of an imaginary stock exchange based on the game "Pit."

SUGGESTED TIME ALLOWANCE:   45 minutes - 1 hour

OBJECTIVES:
Students will:

1. Assess their daily consumption of oil and petroleum-based products.
2. Examine the current global oil supply situation by reading and discussing "Mideast and Venezuela Turmoil Sends Oil Prices Into Wild Swing."
3. Learn about commodities trading--and concepts such as "supply and demand," "scarcity," and "cornering the market"--by participating in a "Corner the Market" game.
4. Synthesize their knowledge of supply and demand and the current oil supply situation by writing letters to President Bush and OPEC.

RESOURCES / MATERIALS:

• -pens/pencils
• -paper
• -student journals
• -copies of "Mideast and Venezuela Turmoil Sends Oil Prices Into Wild Swing" (one per student)
• -one "deck" of 60 index cards per group of six students. Each deck should contain six "suits" of ten cards each with corresponding point values: oil-20 points, steel-15 points, precious metal-10 points, livestock-5 points, agriculture-5 points.
• -large pieces of construction paper (one per group)

ACTIVITIES / PROCEDURES:

1. WARM-UP/DO-NOW: In their journals, students respond to the following prompt (written on the board prior to class): "How many oil and petroleum products do you use or consume on a daily basis? List as many examples as you can from your everyday life." Allow students to share their responses briefly, listing them on the board as they offer examples. (Examples may range from cosmetics and home heating to modes of public transportation.)
2. As a class read and discuss "Mideast and Venezuela Turmoil Sends Oil Prices Into Wild Swing," focusing on the following questions:
   1. How have oil prices in the United States changed this year?
   2. To what might one attribute these changes?
   3. Which oil-exporting countries are of particular concern and why?
   4. What conditions in Iraq have threatened the energy supply to the United States?
   5. What conditions in Venezuela have threatened the energy supply to the United States?
   6. How might the impending seasonal changes affect United States oil consumption?
   7. How has the automobile industry played a role in increased gasoline consumption?
   8. Why are some analysts optimistic about the energy supply despite others' concerns?
   9. According to the article, how does the energy supply in the United States relate to the Israeli-Palestinian conflict?
   10. How is it possible for Iraq to be the sixth-largest supplier of oil to the United States when the United States has not traded with Iraq since the Persian Gulf War?
   11. How do Iraq and Venezuela differ in terms of the time in which it takes for their oil to reach the United States?
   12. What is meant by the quote, "If the strike is successful or it lasts for more than a day, you can expect troubles"?
3. Explain to students that today they will be playing "Corner the Market," an adapted version of the "Pit" game (instructions below are adapted from the official Parker Brothers instructions). Divide students into groups of six and give each group a deck of cards and a piece of construction paper marked "CORNER!" in the center.
   After a brief overview of economics terms such as supply and demand, scarcity, commodities, exchange, "cornering the market," explain the following instructions of the trading game (written on the board for easier student access):
   1. Place the "Corner!" board on a desk situated in the center of each group.
   2. Prepare a score sheet with each group's members listed.
   3. Select a dealer.
   4. The dealer prepares the deck for play as follows: include one complete 10-card suit for each player and leave the remaining suits out of play for the entire game.
   5. The dealer shuffles the deck and deals 10 cards, face down, to each player.
   6. Each player picks up his or her cards and arranges them by suit, while making sure no other player can see the hand.
   7. Each player will attempt to corner the commodity of which he or she holds the most cards.
   8. After each player has had a chance to sort his or her cards, the dealer announces, "The Exchange is open."
   When the dealer announces "The Exchange is open," players begin to trade by taking from their hands one to four cards of the same suit or commodity that they do NOT wish to corner. Each player will hold up the cards so the suit does not show and call, "Trade One! One! One!" or "Trade Two! Two! Two!" etc., depending on the number of cards he or she wishes to trade. Players may trade cards with any opponent who is calling out the same number. Sometimes a particular player will want to trade fewer cards than another opponent. In this case, the player may lower his or her original bid and trade the smaller number of cards.
   
   Players continue trading until one player gets 10 cards of the same suit. The player that achieves a full suit first will hit the Corner board and call out, "Corner on Oil!" (or whatever the suit may be). The player who wins that round will be awarded the appropriate number of points for the commodity he or she has cornered and record the score on the score sheet (oil-20 points, steel-15 points, precious metal-10 points, livestock-5 points, agriculture-5 points). Example: If a player corners the market on oil, he or she will be awarded 200 points for that round. The winner of the round will reshuffle the cards and deal the next hand. The "winner" of the trading game will be the first player to accrue at least 600 points.
4. WRAP-UP/ HOMEWORK: Each student writes two letters, one to OPEC and one to President Bush, expressing his or her view about how OPEC and the United States should proceed with the possibility of energy embargos and "shortages." Should the U.S. seek other means of oil or energy? Should American citizens be expected to curb their energy consumption at this time?

DISCUSSION QUESTIONS:

• How might the people of the United States prevent a possible oil crisis? How do you think the Bush Administration can work toward this end?
• Do you think it is possible for Americans to become less dependent on petroleum products? If so, how? If not, why not?
• Who benefits from the United Nations' oil-for-food program in Iraq?
• If there were a strike among workers in a particular industry in the United States, similar to the "work slow-down" in the oil company of Venezuela, which industry do you think might cause the most "shock" in the global economic system if its exporting potential were compromised? Why?

EVALUATION / ASSESSMENT:
Students will be evaluated based on initial journal responses, participation in the "Corner the Market" activity, and written letters to President Bush and OPEC regarding the oil trade.

VOCABULARY:
crimp, halt, simmering, poised, embargo, refineries, prolonged, hobbled, consumption, alluding, OPEC, sympathetic, stabilize, beck and call, compensate, analytical, escrow, leeway, burnish, tweak, refiners, brokerage, exert, disruptions, autocratic, quash, stoppage, intensification, swaths

EXTENSION ACTIVITIES:

1. The game you played in class is based on the Parker Brothers game "Pit." Write a brief history of the "Pit" game and its popularity, including the controversy surrounding its development (Edgar Cayce, one of the most famous American psychics or "spiritualists" of the early twentieth century, claimed to be the original creator of the game).
2. Who belongs to OPEC? Create a "Who's Who" directory of OPEC members, with a detailed entry for each member. Make sure to include each member's history with OPEC, its current leadership and its economic status.
3. Research Iraq's oil-for-food program mentioned in the article "Mideast and Venezuela Turmoil Sends Oil Prices Into Wild Swing." Why has it been necessary for Iraq to exchange precious natural resources for basic sustenance? Write an analysis of how the people of Iraq have fared since the Persian Gulf War?
4. How do American companies buy, sell, and distribute oil from OPEC countries? Create a chart of the top U.S. energy and oil companies to visually demonstrate this process.

INTERDISCIPLINARY CONNECTIONS:
Civics- The article "Mideast and Venezuela Turmoil Sends Oil Prices Into Wild Swing" refers to Venezuelan President Hugo Chavez as "autocratic." Make a chart based on Aristotle's three forms of government (autocracy, oligarchy, and democracy) and offer two modern examples of each. Make sure to explain why each state would be classified as such.

Fine Arts- Create a satirical political cartoon to represent your own view of the current global oil situation.

Media Studies- The article "Mideast and Venezuela Turmoil Sends Oil Prices Into Wild Swing" mentions that the people in some OPEC states have criticized the United States for "policies that many Muslims regard as too sympathetic to Israel while ignoring the concerns of the Palestinians." Do you agree or disagree with this statement? Find three examples from the media to support your argument.

Science- Create a "How it Works" diagram to describe the process through which crude oil is refined.

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Copyright 2002
The New York Times Company