Fracking and its Impact on the Edgeworth Box Diagram

This study examines the impact of fracking on the Edgeworth box diagram and the welfare of both the US and India. It analyzes the economic damage to the US and the potential benefits of trading natural gas. The study also discusses the environmental and health hazards associated with fracking.

Introduction
Using the method of fracking the development most of the fossil fuels traders will be willing
to identify the factors that will be required for the development of the fracking in the US. The
importance of this study lies in the development of better welfare economics that these two
countries are willing to highlight the development of the consumer surplus that will be
highlighting the development of the Pareto equilibrium. Through the development of better
innovation in the Edgeworth box diagram, the study will be able to highlight the importance
of better knowledge on the welfare regarding the two products in the two countries.
The first chapter will be determining the impacts on the development of fracking on the
Edgeworth box that will help in the development of the incident. Second, it looks at how the
discovery affects the welfare of both countries and whether the US has any economic damage.
In the end, Obama's hypothesis will be judged on base of the model and the literature.

Analysing of the Edgeworth box diagram
The Edgeworth box diagram is having the assumptions that both India and USA are having
same kind of preference regarding the development of the trading among these two countries.
On the other hand, another assumption is that indifference curve is convex in nature. Through
the implementation of convexity, it will be important for the country to determine the cost and
the opportunity costs that will be traded in the economy. Through the incorporation of the
edgeworth box diagram, the incorporation of better innovation will be identified. Through the
improvement in the development of Edgeworth box diagram, both the countries like US and
India will be willing to identify their resources.
The horizontal line of the box indicates the total number of gas and the vertical line of rice.
Point A is considered the initial allocation before discovery of the gas. For a given price line,
the price takers and the producers are guided by the price. This is how the indifference curve
in the lower graph comes about.
rice rice
Figure 1: Edgeworth box diagram before the gas discovery
Now, the discovery of the new gas reserves should be modelled by an increase in the
endowment of gas. For this purpose, a second box is drawn, where you can see the effects
before and after the gas increase. USA will gain through the new discovery but there is no
India
USA
gas
gas
-PG/PR

guarantee that both countries will. It is even possible that the gas owning country USA may
be made worse off. The possibility is, that both countries can gain through trade. India, which
does not own gas, has the same indifference curve before and after the discovery. USA moves
on a higher indifference curve through the endowment. Since the price takers are oriented
towards the price, the indifference curve has a different form. Now it can be seen that before
gas discovery the price line was steeper than after the discovery. The increase in the
endowment of gas must reduce its price in equilibrium relative to the other good. Because of
the price reduction it is possible, that the gas owning country USA might have economical
damage.
rice rice
Figure 2: Edgeworth box diagram after the discovery of gas
Welfare level of both countries
If the US will be having more gas, then the continent will be having high comparative
advantages in the trading of the gas and they will be importing rice from India.It is also
possible for India to seek a higher welfare benefit. Because by increasing gas, India can now
import the gas at a cheaper price than before, which is an advantage for them. For the US, it
can also have disadvantages, because when suddenly the price of a good sinks, it also has an
impact on other economic processes. Since the price ratio corresponds to the marginal cost,
one would also have to lower the marginal cost. For this reason, it can also be said that the
Indien
USA
gas
gas
-PG/PR -PG/PR

statement of Obama cannot be correct. It could be that wages and capital are falling. For this
reason, they would have to save the work and there can be no 600,000 jobs in the future.
In the country ofUS, the Marcellus Slate in Pennsylvania is having more natural gas than the
North Sea. Moreover, the development of the US natural gas extract technologies from the
shale formations has evolved so rapidly that the predicted reserves are being updated every
month. Through the development of this monthly adjustment is effecting greatly on the global
energy market. Responding to the war price, the companies like Gazpom have to come up
with new strategies (NZZ, 2019). Surplus in the stock has given rise to the fall in shale price
in US. Due to the price fall in US the subsidy is decreasing and through industries like
aluminium, fertilisers and chemical industries are seeing huge potentiality. However, the
demand for the natural gas is not increasing by that much. One of the ways to indulge deeply
the price of the gas is to export the gas to Canada and Mexico.
Through the utilisation of better equipment in the fracturing process that will be using the
innovation in the drilling. The improvement in the oil fracking will be willing to identify the
information that will be mainly willing to improve the development of the resources that will
be helpful in the sense that it will definitely increase the resource utilisation.
The country is using hydraulic fracturing in producing the shale gas by using the sand, water
and chemicals and releasing shale gas. The hypothesis of Barrack Obama regarding that the
country is having more than 600000 new jobs and the Energy under their feet is in this view
correct (Schröder, 2012). In the upcoming years, the country will be a leading supplier of
natural gas if the modern tools and the technologies are being used. The main aim of this
fracking is to lower the dependency on Saudi Arabia but this continuous fracking are having
deep impacts on the economic and the health hazards in the form of headaches and shortness
of breath due to increased level of the ozone layer. The increase in the supply of the natural
gas and the decrease in the demand of the gas, the price is falling down that is having an
impact on the long run potentiality of US.
Companies like Gazprom should come up with new technologies and new strategies
that will help in the development of prices in the country. Through the implementation of
natural gas storage, the international price has fallen sharply. Since the fall in price, the
electricity price is being determined by the natural gas in the Germany. Energy efficient firms
in the form of aluminium, steel is looking to invest in the USA in order to reduce the
production costs. The demand for the natural gas in America is lagging behind the production
and currently due to oversupply of the natural gas the price is falling in nature.

The price ratio in figure 1 is –PG/PR. This is because of the fact that for the USA, the price
gas in not increasing due to mainly the increased gas price in the country to drill the natural
gas and oils due to mainly the corruptions and the increased level of the environmental
degradation through the technologies. This is important in the sense that economy of US is
moving towards the intersection of the IC curves (Broder, 2014). For US, the price of the rice
is high and if they want to produce, rice then that will increase the cost of operation.
Due to the development in the innovation, it is important to identify the pros and cons and it
will automatically help in increasing the improvement in the resource utilisation that will
allow the economy of both the country that will definitely improve the importance of resource
allocation.
Does US have any economic damage?
The major problem of this study is that including America most of the developed countries
has been importing the oils and natural gas from Saudi Arabia and other Middle East
countries. However, the president of the United States is supporting the fact in order to half
the oil imports from Saudi Arabia by 2020, Barack Obama claimed to having more than
600,000 jobs and they are having huge level of storage (Schröder 2012).
Instead of storing back the natural gas, it will be highly important for the country to indulge in
trading the natural gas so that the country has to import less from the Middle East. This is
important in the sense that through the utilisation of international trade policy, the government
will be willing to indulge in the development of the better trading policies that will easily
identify the development of the resources on the utilisation of the resources. On the other
hand, the fracking is common in United States and even after development of the innovations
is important in the sense that USA has not been able to utilise their resources. Through the
utilisation of the international policy the USA will be able to increase the trading of the
natural gas. Through the incorporation of better trade the impact on the oil trading will
improve the oil prices in the international market. According to Bomberg (2017), the
development of drilling and fracking is closely related with the development of the
manufacturing sector that the study will be developing in order to utilise more amount of
employee participation. According to Caseyet al. (2016), the developed countries like USA
still prefer the fracking of natural gas in spite of knowing the health issues. This is because of
the fact that in order to utilise the development of drilling, the country will be willing to
identify the development of the labour force and the American president is looking to increase

the job opportunities within the country as the development of the employment in America is
important and during that point of time, American president is looking to minimise the
unemployment scenario. During a long span of time, the American economy is suffering from
prolonged unemployment and they has to spend lots of money on the import of the oil from
the Middle East countries.
As opined by Cotton (2017), the development of the fracking is playing an important role in
the degradation of environment of US. They will be looking on the development of health
hazards that will be indulging the development of the health and will be looking forward for
the development of process that will be dealing with the involvement of the health policies.
According to Finkel andHays (2016), the environmental impact is having different thing that
will increase the innovation of the fracking of the natural gas. The development of the
innovation technology will bring on the innovation of the drilling technologies that will
introduce the development of better motivation for the employees. Through the development
of the impact of the environmental, it is important for the country like USA to increase the
involvement of better renovation in the employee. According to Hirschet al. (2018), the
development of introduction of better technologies will obviously increase the development of
the fracking the development of management of both drilling and environment is looking into
the matter of better understanding of the resources that will not be helping in the drilling of
the natural gas. On the other hand, the innovation in the drilling will develop the production
but will be harassing the health of the individuals living in the US economy. According to
Lutzand Grant (2016) using hydraulic mode of drilling will bring the innovation in the
production but will bring more amount of damage to the environment of the economy.
Obviously the US economy is facing stiff challenges that will definitely have an effect on the
improvement in the better management in the policies.
Conclusion
The study has come to the conclusion that in order to increase the development of resources
utilisation and how the fracking is actually implementing the development of the
environment. On the other hand, the development of better technologies will be able to
introduce the development of better environment. Though the US economy is not going
through good phase but during the election process, the US economy is looking for the
improvement in the development of the fracking. Through the development of the Edgeworth
box it has been seen that USA has been dooling with the development of the better training

that will not only induce the development of international trade and will be looking for the
development of the business. Through the innovations in the drilling of the natural gas the
country will be dealing with the development of better oil price in the economy of both USA
and they will be highlighting the development of better job opportunities that will be bringing
in the economy in the manufacturing sector of the economy.
The hypothesis that was claimed by Barrack Obama was “We have 600,000 new jobs and
energy directly under our feet for several hundred years" and this is absolutely true because of
the fact that it will be highlighting the employment opportunity in the country.

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