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When the Laws of Supply and Demand Don't Apply

Essay by   •  January 23, 2011  •  Essay  •  394 Words (2 Pages)  •  1,120 Views

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With the price of natural gas increasing and the supply decreasing creating a scarcity of natural gas, the drilling industry should open up areas in or close to the United States that are closed to exploration because of land regulations. Because of the cold winter of 2002-2003, the supply amount of the natural gas in the US is down by 20%. A shift in the demand curve cannot occur, because there is no possibility of a substitution method or a change in consumer attitude - everyone needs natural gas. On the other hand, a shift in the supply curve cannot occur, because there is no change in the amount of resources and the suppliers are not willing to provide because of the extreme costs and government regulation of land.

Therefore, suppliers need to get a hold of the available resources that are not being used here in the United States. The US holds about 3% of the natural gas supply. If the industries were able to drill the land and use it, the people of the United States would be content and comfortable for sometime. The argument against domestic drilling is that it will not help in the long term. If the drilling industries were able to obtain enough oil for a while, the time could be used thinking up of other ways to get more natural gas, for the changes in the unpredictable prices, or for the in-depth research of the opening of a US market in the international trade of natural gas. In the meantime, people in the US should be rationed natural gas, as is now with the water in Colorado.

The attitude in consumers must change now that the supply of natural gas is limited. The US has only 3% of the natural gas supply, yet the people of the United States use a quarter of the worldwide consumption. As of now, it will be the best decision to drill up the domestic natural gas and to ration it for everyone until better technology is offered for the overseas transportation of natural gas. It would be an unpractical idea to have drilling industries lose money by investing in the expensive equipment and capital resources needed for the difficult transportation of natural gas that is not even guaranteed.

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