From the WSJ Weekly Review:
U.S. Approves Expanded Gas Exports
by: Keith Johnson and Ben Lefebvre
May 18, 2013
Click here to view the full article on WSJ.comTOPICS: International Trade
SUMMARY: The Obama administration cleared the way for broader natural-gas exports by approving a $10 billion facility in Texas, a milestone in the U.S. transition into a major supplier of energy for world markets. "Proponents of greater exports, including the oil and gas industry, say that exporting inexpensive natural gas will help the U.S. trade balance, help advance the adoption of clean-burning fuels around the world and shore up energy-poor U.S. allies. Opponents counter that exports may cause domestic prices to rise, hurting consumers and some industries such as chemicals that have benefited from cheap natural gas. Some environmentalists oppose exports for a different reason, saying the U.S. shouldn't encourage more fossil-fuel production."
CLASSROOM APPLICATION: Students can analyze the effect of the federal government's approval of broader natural gas exports on the U.S. natural gas prices and U.S. consumer surplus. Students can also examine the effect of the policy on fossil-fuel production.
QUESTIONS:
1. (Advanced) What is the effect of the federal government's approval of broader natural gas exports on the price of natural gas in the U.S.? What is the effect of the policy change on consumer surplus in the U.S.?
2. (Advanced) What is the effect of the federal government's approval of broader natural gas exports on the worldwide burning of natural gas and also the burning of other fossil fuels? What is the effect of the policy change on the overall production of carbon?
3. (Introductory) Why is the Obama administration clearing the way for broader natural-gas exports?
