Perform Case Study Natural Gas Boom Fuels Debate on pages 47 & 48 in Internation

Question

Perform Case Study Natural Gas Boom Fuels Debate on pages 47 & 48 in International Economics textbook by Carbaugh. 1. Do you feel that natural gas should be exported by the United States? Why?

some natural gas during this period of time, but has gen- erally imported more than it has exported, mostly from Canada. However, this trend began to change around 2010 when new sources of natural gas were found in the United States, particularly from shale gas. Technologies were developed (hydraulic fracturing and horizontal dril harm drinking water ling) that allowed water, sand, and chemicals to create fissures in shale, allowing trapped natural gas to be cost prices is another vital question in the debate over whether effectively extracted. Suddenly the United States to export. A significant increase in U.s. natural gas increased its ability to produce natural gas. in U.S. natural gas means an extended reliance on fossil fuels and the delay of the shift to clean-tech energy such as solar power or wind power. They also are concerned about the environmental damage from drilling techniques used in the extraction of natural gas from shale that can What effect exporting natural gas will have on U.S. exports would likely impose upward pressure on domestic The natural gas bonanza helped lower U.S. energy prices, but the extent of any rise is unclear. There are a prices and resulted in U.S. producers being poised to variety of factors that affect prices, such as economic ship vast quantities of gas overseas. However, federal growth rates, differences in lpcal markets, and govern- law requires the U.S. Department of Energy to determine ment regulations. Producerst contend that increased that natural gas projects are in the public interest before exports will not increases prices significantly because granting export permits to countries that do not have free there is ample supply to meet domestic demand, and trade agreements with the United States. As producers there will be the extra benefits of increased revenues, such as Exxon Mobil sought federal permits for export pro- trade, and jobs. Consumers of natural gas who are helped jects, a debate ensued over whether they should be by low prices, fear prices will rise if natural gas is allowed to expand their exports Industry proponents argue that natural gas exports pro- At the writing of this text, it remains to be seen how the effects of increased natural gas exports will play out. vide a much needed source of energy to American trading partners and foster economic growth and jobs in the United States. They are eager to take advantage of higher prices in foreign markets. Industry experts acknowledge What do you think? Do you feel that natural gas should be exported by the United States? that although many countries are endowed with large shale reserves, most countries are several years behind the United States in extraction and exploration. Moreover, Washington, DC, January 28, 201 Source Michael Ratner, and others, US Natural Gas Exports: New Opportunties, Lincertain Outcomes, Congressional Research Service, 5, Gary Hufbauer, Alie Bagnall, and proponents maintain that expanded exports of natural gas ula Mar,Luiled Natural Gas Exports An Opportunity for Amenica, are a boost to key U.S. allies, especially Japan, as it tran- sitions away from nuclear power Peterson Institute for International Economics, February 2013, and Robert Pirog and Michael Ratner, Natural Gas in the U.S. Economy Opportunities for Growh, Congressional Research Service, Washington DC. November 6. 2012 However, environmentalists contend that natural gas still leaves a significant carbon footprint: A global interest Trading Under Increasing-Cost Conditions The preceding section illustrated the comparative advantage principle under constant cost conditions. In the real world, a good's opportunity cost may increase as more of it 12% Page 48 of SS6 0 0

Explanation / Answer

Yes, Natural gas should be exported to other countries as it not only increase the revenue of the country but also helps US to become a key player in the export of natural gas. People fearing of increase in prices of natural gas is also a valid reason but they should be made aware that the country has ample supply to meet domestic demand and also to supply to foreign countries. Due to export of natural gas it will not only bring revenue to the country but also increase the jobs in the country due to demand for natural gas from other countries. There will be good trade policies with other countries and those countries will offer trade by decreasing traiff which is beneficial to US.

Due to export of natural gas there will be economic growth and it will also be a boost to the US allies which even makes our relationship better with them.

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