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Upcoming in Class

Upcoming in Class. Homework 7 due Wed. Exam #3 Wed. Lowest gas prices in over 10 years. Pressures on transportation routes Reconfiguration of gas corridors. TransCanada. GTN. Bison. LNG. Northern Border. Ruby. LNG. REX. Kern River Expansion. Midcon . Fayetteville Express.

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Upcoming in Class

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  1. Upcoming in Class Homework 7 due Wed. Exam #3 Wed.

  2. Lowest gas prices in over 10 years

  3. Pressures on transportation routes Reconfiguration of gas corridors TransCanada GTN Bison LNG Northern Border Ruby LNG REX Kern River Expansion Midcon Fayetteville Express Transco Gulf Coast Gulf Crossing Midcon Express LNG FGT Expansion Flow increase Flow decrease

  4. Substitution of gas for coal generation U.S. Coal Generation Supply Curve 2011 Source: Derived from SNL data

  5. Government Effects • When the government allows private firms to extract minerals offshore or on public lands, two common means of sharing in profits • Bonus bidding – awards the highest bidder the right to extract and paid up-front • Production royalties – charges a per-ton royalty on each ton extracted and paid as long as the mineral is extracted

  6. Bidding vs. Royalty How will this affect extraction over time? Would either be consistent with the efficient allocation? Suppose the price path and size of deposits are unknown. How would the risk be shared between the government and mining company, for the two different policies?

  7. Bidding vs. Royalties MC $/Q AC MR Q

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