Need to reply to group discussion, give good points on the below discussion, also demerits of the below discussion, and final a good opinion on the discussion.
“Fracking is one type of technology that is used in the energy market. The process is to extract natural gas or petroleum from shale rock formations. Although someone argues that fracking will cause some potential water contamination and cost a large amount of energy, it plays an essential role in oil and gas production in the United States. Fracking leads to an increase in domestic oil and natural gas production, as well as a decrease in energy prices. Covid-19 indeed brings a few significant impacts on various industries, which includes natural gas and oil production. Due to Covid-19, there are severe restrictions on economic activities and a rapid decline in energy demand. The pandemic reduces fracking operations and causes a decrease in oil prices. Long-Run Aggregate Supply(LRAS): It typically refers to the “potential level of real output” when all the resources are fully utilized. (Hubbard & O’Brien, 2022) Short-Run Aggregate Supply(SRAS): It represents the relationship between the price level and the total output from the short run. To summarize the tables from the textbook, an increase in labor costs, other input costs, and the expected price level will lead to Short-Run Aggregate Supply Curve shifts to the left. The increase in capital and labor inputs or productivity will cause the LRAS curve to shift rightward. Covid-19 leads to a serious reduction in fracking activities due to the decrease in oil prices and demand. As a result, the aggregate supply curve will shift leftward, indicating that the overall supply of natural gas and petroleum declines. Regarding the impacts on Aggregate Demand, the pandemic causes many restrictions on traveling, thus the demand for gas and oil decreases as well. The reduced economic activities and energy demand lead the AD curve to shift leftward as well. The pandemic causes impacted the U.S. in many aspects. Initially, the unemployment rate increased during the pandemic periods. The unemployment and reduction in investment in the energy market result in severe damage to economic growth. Moreover, international trade is limited as well. The declining fracking operations at that time leaves higher energy prices
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