Over the years, many industries have been regulated by the federal government. But one by one, they became "de-regulated" over time. The banking and airline industries were once heavily regulated, as was the telephone business. In exchange for federally-approved rates of service and a set return on investment, companies were given exclusive franchises, or service territories. Today, the de-regulation of formerly regulated businesses has spurred-on competition and stimulated new products and services. The natural gas and crude oil businesses followed behind but eventually became de-regulated as well. The chain of events leading up to that, and the current regulatory status of these industries, is presented in Lesson 5.
At the successful completion of this lesson, students should be able to:
This lesson will take us one week to complete. There are a number of required activities in this module. The chart below provides an overview of the activities for Lesson 5. For assignment details, refer to the location noted.
All assignments will be due Sunday, 11:59 p.m. Eastern Time.
REQUIREMENT | LOCATION | SUBMITTING YOUR WORK |
---|---|---|
Reading Assignment: | Reading Assignment Page | No submission |
Mini-lecture: Pipeline Regulations & Rates - Crude Oil | Part I | No submission |
Mini-lecture: Pipeline Regulations & Rates - Natural Gas | Part II | No submission |
Lesson 5 Activity | Lesson 5 Activity Page | Submitted to TA via email. |
Lesson 5 Quiz | Summary and Final tasks page | Submitted through ANGEL |
Discussion forum participation | Course Blog | Submitted through the course blog |
If you have any questions, please post them to our Questions? discussion forum (not e-mail), located under the Communicate tab in ANGEL. The TA and I will check that discussion forum daily to respond. While you are there, feel free to post your own responses if you, too, are able to help out a classmate.
Reading assignment:
Go to www.naturalgas.org [1] and read the section on "The History of Regulation." Also, see http://www.downsizinggovernment.org/energy/regulations [2] and read "Overview" and "Oil Market Policies."
Points of Emphasis
The history of regulation for crude oil and liquids pipelines goes back to the first regulation of the railroads back in the 1800s. A fear of a monopoly by the few railroads in existence prompted the US government to form the Interstate Commerce Commission. The body was later given jurisdiction over interstate crude oil pipelines based upon the same monopoly fears.
Under federal regulations, pipelines must file “just and reasonable” rates and provide access to any shipper requesting space, if available.
The following mini-lecture provides a brief summary of the history of regulation in the crude oil and natural gas industries.
While watching the Mini-Lecture, keep in mind the following key points and questions:
You will be graded on the quality of your participation. See the grading rubric for specifics on how this assignment will be graded.Submit your answers via email to the TA: Mike McCormick "mwm5342@psu.edu [4]"
The services and rates that pipelines charge represent a component of the value chain for crude and natural gas, but how the actual wellhead and delivered prices are determined will be examined in Lesson 6.
You have reached the end of Lesson 5. Double-check the list of requirements on the first page of this lesson to make sure you have completed all of the activities listed there before beginning the next lesson.