If I bake a batch of cookies and the recipe calls for two cups of flour, but I have only one, it is pretty clear that I can’t bake a full batch of cookies. All I can make is half a batch. I will end up with half of the sugar, and half of the eggs, and half of the shortening that I originally planned to use left over.

Liebig’s Law of the Minimum applies in situations like this. In agriculture, it says that growth is controlled not by total resources available, but by the one in scarcest supply. If a baker does not have enough of one necessary ingredient,  he will have to make a smaller batch. I wonder if it isn’t a little like this with oil and the economy. Continue reading →