Environmental Engineering Reference
In-Depth Information
6.3 Employment
The simulation results obtained from the first experiment show that
without expansion in crude oil and gas, the demands for unskilled labour,
skilled labour and capital will go down by about 1.3%, 1.2% and 1.6%,
respectively, during the period 2007-35. With the expansion in shale oil
and gas, the demands for these primary inputs increase by 2.1% 1.9% and
2.5%, respectively, in this time period. Our simulation results indicate that
adding a restriction on gas exports reshu
es the employment among sectors
but will not improve it. These figures confirm that the expansion in shale oil
and gas positively affects employment and generates job opportunities
directly and indirectly, and that restricting gas exports will not enhance
these effects.
6.4 Prices
With no expansion in shale oil and gas, the prices of oil and gas are expected
to increase by 9.3% and 8.8%, respectively, during the period 2007-35. This
increases the prices of gas distribution (by 4.8%), petroleum products (by
3.5%) and electricity (by 0.8%). These increases in energy prices negatively
affect economic activities, and that reduces the prices of goods and services
during the period 2007-35, as shown the last column of the first panel of
Table 2. With the expansion in shale oil and gas, prices follow reverse trends.
In this case, prices of oil and gas drop by 5.9% and 16%, respectively, during
the same time period, as shown in the last column of the bottom
panel of Table 2. This reduces the prices of gas distribution (by 9.1%),
petroleum products (by 2.9%) and electricity (1.6%). The lower energy prices
generate a boom in the economy, and that leads to higher prices for goods
and services. When we limit exports of oil and gas, prices of energy items fall
much more. For example, in this case the prices of oil and gas drop by 10.8%
and 24.1%, respectively, in the period 2007-35. In conclusion, increases in
supplies of oil and gas reduce energy prices. However, lower energy prices
increase economic activity, and that leads to slightly higher prices of non-
energy commodities due to the positive impacts on households' real
incomes.
6.5 Trade Impacts
The increases in oil and gas supplies in combination with their general
impacts on the growth rate of economic activities have the potential to alter
the trade balances of goods and services in different directions. The trade
balances will change due to changes in imports and exports and also to
changes in world commodity prices. For example, with no expansion in shale
oil and gas, the US imports more oil and gas. This increases the demand for
these commodities in the global market, which eventually raises prices of
these items. The reverse happens in the presence of expansion in shale oil
and gas. In what follows we only present the changes in net exports.