Question

In August 2005, Hurricane Katrina damaged or destroyed oil platforms in the Gulf of Mexico, refineries along the Gulf coast, and the pipeline infrastructure that transports oil and gas to customers across the eastern United States. The winter of 2006 was unusually cold in many parts of the country. How did these events affect the market (equilibrium) price and quantity for natural gas

Answer 1

• Increased equilibrium market price
• Decreased equilibrium quantity

Step-by-step explanation:

As a result of the hurricane, oil platforms and refineries were destroyed. This reduced the amount of natural gas being processed by these facilities. With less natural gas being processed, less gas was being supplied to the country which means that the quantity supplied reduced.

This would shift the supply curve to the left and it would then intersect with the demand curve at a higher equilibrium price. This higher price reflects the relative scarcity of natural gas.