Fracking

How did the shale gas revolution affect volatility and average price of NG?

- Lower/more controlled volatility
- Lower average price

How did the shale gas revolution affect coal?

They are substitutes; so more supply and cheaper prices for NG leads to a decrease in demand for coal

What are their methods used in the Kellogg et al paper?

They assess elasticity to understand changes in CS and PS; demand and supply for NG is very inelastic

To get the counterfactual supply, they subtract off the shale and it tells them where we would be without shale

What are the effects of shale innovation in the US on global markets?

Imports from Canada into the US falls; exports rise to Mx, etc

What drives a wedge between LNG prices in Europe and the US?

Energy prices are pretty homogeneous, transportation costs vary however

Why is NG prices increasing in the US?

As a result of the Russia-Ukraine war, prices in Europe have gone up so it’s now worth it to US producers to incur transportation costs and sell in Europe

As a result, consumers in the US are now competing with European consumers

What are the welfare affects of the shale revolution?

Most benefits of shale gas in the US have accrued to consumers

Gains are concentrated in the Midwest and South Central regions

A wedge has developed between US and foreign gas prices, and it hasn’t been arbitraged away

Shale gas has had economic impacts both positive and negative

What are the env impacts in Hausman and Kellogg?

Relatively cleaner but also small amounts of particulate matter