the novel opens with santiago thinking about his sheep. what does he observe about there existence? how might the sheep symbolize he way some people live their lives?

Santiago observes that, although content, they (the sheep) are only concerned with eating and sleeping. They do not contemplate life, a higher purpose or spiritual matters. Santiago wonders if this is also the case with most people. He wonders if he is content to simply eat and sleep through life without any sort of deeper understanding or meaning. This is actually an age old question. In Hamlet Act 4, Hamlet asks the same question, "What is a man, If his chief good and market of his time be but to sleep and feed?" Santiago's observation is, in part, the catalyst for his adventure to the pyramids and his search for treasure. This quest becomes his self-awakening and enlightenment.

They’re kind of followers of him and they know that he’ll lead them to what they want. He is dependant on the sheep for his profit and the sheep are dependant on him for their food and shelter. In a way, they rely on each other.