Natural Gas Prices Are Rising
This paper is going to contain an analysis about articles pertaining to a current event related to the market in which my organization operates. According to the book Macroeconomics, by David Colander, economics is defined as the study of how human beings coordinate their wants and desires, given the decision-making mechanisms, social customs, and political realities of the society. This paper will also include an example of supply and demand related to this topic, and discuss the difference between movement along and shift of the demand curve. In addition, the role of government will be discussed as well. The articles I have chosen are entitled, "Natural gas prices rising" by Lisa Hayes who is staff writer at Petoskey Newspaper, and an article retrieved from DTE Energy's intranet website entitled "Rising Natural Gas Costs".
I am employed at DTE Energy, which is an energy provider for over 2.1 million electric customers and 1.2 million gas customers for Southeastern Michigan. The current event related to this organization is the rising of natural gas prices. Natural gas prices are rising because the demand is up, which means that prices go up. DTE projected gas prices to rise this winter, and then remain steady throughout the spring and summer. However, one factor contributing to the price increase is low natural gas reserves which are the result of the long cold winter, past the significantly depleted underground storage stockpiles, meaning more gas now needs to be bought to compensate. This is definitely a supply and demand issue (Hayes, L).
The Economist. The Economist Newspaper, 20 Oct. 2010. Web. The Web. The Web.
Renowned economist, Steven D. Levitt, and well-known journalist, Stephen J. Dubner, in their collaboration of the book, Freakonomics: A Rogue Economist Explores the Hidden Side of Everything, write in a mostly inoffensive style about extremely controversial topics. Levitt’s and Dubner’s purpose is to inform readers of frequently disputed topics from a purely economic standpoint. They use second person to directly speak to their readers, an impartial tone to show an unusual perspective, and contrast to provide both sides of an argument.
Brue, S. L., Flynn, S. M., & McConnell, C. R. (2011).Economics principles, problems and policies. (19 ed.). New
In 2004, crude oil producers around the world expected a 1.5% growth in the world’s demand for crude oil. The actual growth rate was more than double the projections at 3.3%. This growth was due to rapidly industrializing of foreign countries such as, China and India. Therefore the lack of crude oil affected the supply of gasoline to consumers at the pump.
Fuel prices is an area of concern for the motor carrier industry. Fuel prices are at an all-time high, driving the industry to make drastic changes. Individuals in the industry believe that by reducing the demand for fuel is the best way to address the current fuel issue. One of the leading alternatives to this fuel issue could be natural gas.
Natural gas extraction and consumption has risen over the past thirty years. Also known as hydraulic fracturing or fracking, a tremendous amount of uproar is being made in the environmental and political communities. Natural gas use is a great source of energy worldwide, only in America have we had a gold rush affect when it comes to extraction. Natural gas provides less dependence on foreign oil, less need for coal plants, and a more affordable energy source worldwide. There are many advantages to using natural gas but the way in which it is being extracted has caused many people to become sick. The detrimental environmental impacts caused by hydraulic fracturing continue to rise. Not to mention the political pull on big corporations and water quality standards. Currently in the Marcellus shale in Pennsylvania and the Barnett shale in Texas, the air and water quality have diminished over the past years since drilling sites ran rampant. Natural gas is natural in terms of how it came to be, but not natural in how they extract it and the problems it is causing everyone involved. To make aware the dangers of hydraulic fracturing, environmental impacts, water quality and air emissions, must be considered.
The United States relies on imports for about forty percent of its crude oil, which is the lowest rate of dependency since 1991 according to the U.S Energy Information Administration. Today our country is trying to keep on track in becoming less and less dependent. When it comes to the topic of the future ways the United States will get its fuel, most of us readily agree that the United States should become more independent by using natural gas that is already here on our land. Where this argument usually ends, however, is on the question of the consequences drilling for natural gas brings. Whereas some are convinced drilling is safe, others maintain that it is actually in fact dangerous. Hydraulic fracturing or "fracking", the terms for drilling for natural gas, is dangerous to our public health and to the environment because of the water contamination it causes. Therefore, it is not something that should become a project for alternative fuel used by the United States.
Currently, the most important factor in the rise of gas prices is the increasing cost of crude oil. Unfortunately, the United States has three percent of the world’s oil reserves. (Horsley) In 2009, the United States was third in crude oil production as well as the world’s largest petroleum consumer. (e. I. Administration) Such consumption required and still requires the United States to import petroleum/crude oil from other countries.
The American economy has suffered many financial blows in the recent years, but none have such a drastic and heavy effect on the average American than the rising gas prices. A solution to the Gas Crisis, a new and formidable crisis involving the high cost for gasoline powered transportation, must have widespread results across American commuters to either increase the efficiency of drivers, drastically lower gas prices, or provide alternate modes of transportation, consequently allowing for American commuters to be able to efficiently transport themselves at a moderate price.
Since fuel is regarded as a necessity, the increase of fuel prices would have a certain impact on the Australian economy. This will have an effect on a variety of economic aspects which include; demand and supply, elasticity, market equilibrium and disposable income. The goal of this analysis is to discuss the effect that the rise in petrol, holding all things constant (Ceteris Paribus), will have on the Australian economy.
Since the early 2000’s, after new technological advancements in fracking and the discovery of large shale reserves across the country, fracking has increased domestic energy production substantially. Shale gas production has increased 20% from 2005 to 2012, promoting a more prosperous economic demand for domestic energy solutions (Pritchard). The demand for transportation vehicles, fuel, housing and water also increases with the expansion of fracking. Furthermore, the increase in fracking has increased employment significantly. In a country struggling to rebound from a recession, well-paying jobs are easily accessible in the booming oil field. This is evident in the prosperous state of North Dakota, in which the unemployment rate has fallen to 2.8 %( Gottesdiener). However, although this industrial expansion creates temporary employment, the consequences of mismanagement may also cost millions of dollars to repair. Fracking has the potential to create environmental damage such as water contamination, radioactive spills, and increased seismic activity that could cost thousands of dollars in damage. The cleanup of drinking water contamination is difficult and expensive, and ultimately rarely attempted. Moreover, the cost to replace the drinking water of contaminated homes and communities also cost a substantial amount of money (The Costs of
Gas has many effects in our society, and some of these effects have a negative impact in our life. Our daily lives depend on gas, when we go to work, school and going out. We use gas for electricity, cars and many other things. The effects of gas are direct and very affecting in our lives because of the many forms it can be used in. There are many negative effects of rising gas cutting back in vacation time, prices of everything is going up “inflation”, car companies making more efficient cars.
... Also important is the price of complements, or goods that are used together. When the price of gasoline rises, the demand for cars falls.
In this project, we attempt to find out the causes for this price rise, the trends of the rise and the effects that this rise has had on us.
Sullivan, A., & Steven M., (2003). Economics: Principles in action. Upper Saddle River, New Jersey : Pearson Prentice Hal