Natural Gas Market Evolution in US Introduction In terms of primary energy consumption, United States of America is world’s second largest country . It is about 19.5% of the world’s share. US consumed 69.7 billion cubic feet per day against the production of 65.7 Billion cubic feet per day in 2012 . Crude oil consumption and production of US in 2012 stood at 18.5 and 8.9 million barrels per day respectively. Looking at statistics, it can be said that US is fairly independent as far as Natural gas is concerned. Natural gas accounted for 27% of the primary energy consumed in US .To reach such a level, the natural gas market underwent a lot of reforms. The case presents the evolution of gas market which consumes nearly 20% of natural gas in world. Nascent stage: State Governments regulated The natural gas business in US has origin from mid 1800s, when it was a byproduct produced from Coal fields. Natural gas was a byproduct and it was largely for consumed in the same locality where gas is produced1. The key for gas delivery then (and even now) is distribution network. Anticipating the opportunity of natural monopoly the local governments stepped in. These governments had a plan of having a single distribution company (in each municipality) and regulate the price it charges. For the supply of gas with in the municipality and in early stages of the gas market having a single distribution company worked. In early 1900s inter municipality trade developed with the growth of Natural gas Industry. Pipelines reaching out of the area of municipal government’s purview lead to the conflict among the governments, leading to a regulatory gap1. Then the respective State governments formed public utility Commissions and Public Service Commissi... ... middle of paper ... ...eral Energy Regulatory Commission (earlier FPC). The FUA restricted usage of natural gas for Electricity generation and in large boilers. Then on FERC gave a series of orders which changed the way in which the business is conducted – Order 380, 436 (Open access), 500 (addressing take or pay obligations), 636 (unbundling). The NGPA aiming at free market pricing, investments flew increasing production. The Repel FUA was passed in 1987, leading to the surge in natural gas consumption. Full deregulation was declared in 1989.Newyork Mercantile Exchange (NYMEx) delivered the first ever future in 1990. Energy Policy act was passed in 1992, promoting electric generation sector leading to setting up of more gas fired power plants. The evolution of the gas market in US is a great learning to the world especially to developing countries like India, Brazil, Egypt, etc.
The distribution segment consists of two natural gas local distribution companies. Missouri Gas Energy serves 500,000 customers in Missouri, including Kansas City. The New England Gas Company serves 50,000 customers in Massachusetts. Missouri Gas Energy has volume decoupling for its residential and small general service customers, creating more stable earnings. A recent rate case set an allowed ROE of 10% and approved a $16mm increase in rates starting on February 28th 2010.
Even in 2016, natural gas (utilities) is not widely available, which is just one of the reasons that the gas refrigerator failed to become a contender against the electric refrigerator. They also did not participate in the development as
Municipal control or an alternative delivery method? This is the question that has intrigued all levels of local government and created intense debates between taxpayers across municipalities. The services that municipalities provide are often vital to the existence of a local area. The issues of accountability, cost savings, quality of service and democracy often arise when choosing the best options to deliver services to a municipal area. In recent years the concepts of privatization, alternative service delivery and public-private partnerships are often promoted as ways cut down on overburdened annual city budgets and promote a higher quality of service to citizens. Municipalities have historically always provided basic services such as fire protection, water purification/treatment and recreational facilities. However, would private companies or another municipality be able to better deliver the same services more efficiently or at a lower cost? The city or town often provides a political grass roots approach to most local problems. Municipalities are better positioned and have a wider scope to provide services to their constituents in order to ensure quality of service that does not erode accountability and transparency, or drive the municipality deeper into debt.
Gasoline is one of the many conversation starters anywhere you go. People have different opinions on why gasoline prices are fluctuating at such a rapid pace. Some Americans have chosen a way of thinking towards the prices. Whether it be making up rumors or just plainly trash talking towards our government. You make ask yourself the same questions many economist do, why has the price of oil been dropping so fast?
America is dependent on other nations for their ability to create energy. The United States is the world’s largest consumer of oil at 18.49 million barrels of oil per day. And it will continue to be that way for the foreseeable future considering the next largest customer of oil only consumes about 60% of what the U.S. does. This makes the U.S. vulnerable to any instability that may arise in the energy industry. In 2011, the world’s top three oil companies were Saudi Aramco (12%), National Iranian Oil Company (5%), and China National Petroleum Corp (4%). The risk associated with these countries being the top oil producers is twofold. One, they are located half way around the world making it an expensive to transport the product logistically to a desired destination. And two, the U.S. has weak, if not contentious,...
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.
"EIA Energy Kids - Natural Gas." U.S. Energy Information Administration (EIA). Web. 15 Oct. 2011. .
The most manageable way to approach such an intricate and abstruse concept such as public order is to first establish it as a means...
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.
Drilling for natural gas has been going on since the early nineteenth century and our energy consumption has increased dramatically since the beginning of the Industrial Revolution. In the last few years fracking has been making headlines in the news, however not for particularly good reasons. This method has been around since the 1940’s but has gained popularity as a way of tapping natural gas in recent years due in part by the oil crisis and tensions in the Middle East. Since the U.S. has an abundance of natural gas trapped beneath its soil (Daniel 2) one may think that this is a great direction that we are headed in order to sustain our energy needs and not be dependent on foreign oil.
In the 1980’s, Americans thought that the decline of natural gases and oils was an irreversible impact (Davis 178). This led us to be dependent on other countries and pay them to provide us with these goods. However, with fracking being readily available, we can become less dependent on other countries to supply us with what we need (Davis 178). Today, fracking accounts for 56 percent of the natural gas we use and 48 percent of the oil, as recorded by the EPA (Davis 178). Fracking has caused the United States to be not just one of the top producers in the world, but the top producer (Davis 178). Researchers, scientists and even experts believe that fracking will send us on our way to being energy independent (Davis 179).
In 1970 oil reserves became more scarce, leading to a decrease in production, while consumption continued to grow rapidly (Wright, R. T., & Boorse, D. F. 2011). In order to fill the gap between rising demand and falling supply of oil, the United States became more and more dependent on imported oil, primarily from Arab countries in the Middle East. (Wright, R. T., & Boorse, D. F. 2011). As the U.S and many other countries became highly industrialized nations, they became even more dependent on oil imports. With demand being higher than the actual amount of supply, prices kept rising reaching a peak of $140 a barrel in 2008. (Wright, R. T., & Boorse, D. F. 2011).
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.
The oil & gas industry is among the largest industries in the world. The sector generates large revenues and employs a large number of people in order to meet the worldwide demand for energy.