tag:theconversation.com,2011:/global/topics/global-markets-33074/articlesglobal markets – The Conversation2022-08-04T12:22:06Ztag:theconversation.com,2011:article/1877572022-08-04T12:22:06Z2022-08-04T12:22:06ZInflation rates are rising in the US – an economist explains why<figure><img src="https://images.theconversation.com/files/476152/original/file-20220726-11-9wu23p.jpg?ixlib=rb-1.1.0&rect=80%2C17%2C5910%2C3970&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A variety of factors have caused the U.S. inflation rate to increase over the past few years, from the pandemic to the war in Ukraine.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/green-rising-arrow-and-dollar-bills-royalty-free-image/1325296925">Javier Ghersi/Moment via Getty Images</a></span></figcaption></figure><p><em>Consumer prices in the U.S. are rising due to inflation at the fastest rate they have in decades. Earlier this summer, <a href="https://www.sciline.org/economics/inflation/">SciLine</a> interviewed <a href="https://www.econ.berkeley.edu/profile/martha-olney">Martha Olney</a>, a teaching professor emerita of economics at the University of California, Berkeley, about what’s causing prices to rise and what the government can do to encourage a return to stable prices.</em></p>
<iframe title="vimeo-player" src="https://player.vimeo.com/video/728989266?h=3368ff089d" width="100%" height="360" frameborder="0" allowfullscreen=""></iframe>
<p><em>The Conversation has collaborated with SciLine to bring you highlights from the discussion, which have been edited for brevity and clarity.</em></p>
<p><strong>What factors are contributing to inflation?</strong></p>
<p><strong>Martha Olney:</strong> If more people want to buy things – that is, if there’s an increase in demand – that’s going to make prices go higher. The other thing that can drive prices up is a decrease in supply – for example, if it becomes more difficult to produce goods. This happens if there are supply chain disruptions or disruptions in transportation.</p>
<p>In the last couple of years, we’ve had both of those things. At the beginning of the pandemic, <a href="https://apps.bea.gov/iTable/iTable.cfm?reqid=19&step=3&isuri=1&nipa_table_list=19&categories=survey">demand shifted and we started buying more goods, rather than services</a>. We were buying more cars, more electronics, more goods for the home. And we saw that price impact. At the same time, we had supply chain disruptions. So, the demand for goods went up, but the things needed to produce those goods were not as available, and so those prices went up.</p>
<p><strong>How has the war in Ukraine made inflation worse?</strong></p>
<p><strong>Olney:</strong> As we were still dealing with the pandemic, the war started in Ukraine. This impacted both <a href="https://fred.stlouisfed.org/graph/?g=Spok">energy prices</a> and <a href="https://thedocs.worldbank.org/en/doc/5d903e848db1d1b83e0ec8f744e55570-0350012021/related/CMO-Pink-Sheet-August-2022.pdf">food prices</a>. Energy prices increased because of sanctions on Russia – Russia provides oil to the global market. The price of oil is set in a <a href="https://www.eia.gov/finance/markets/crudeoil/spot_prices.php">global market</a>, so any disruption to the oil supply impacts the oil price worldwide. Ukraine and Russia also provide a <a href="https://www.wilsoncenter.org/blog-post/forty-percent-world-food-programs-wheat-supplies-come-ukraine">large share of the world’s wheat exports</a>, and their ability to grow, harvest and export their grain has been impacted by the war as well. </p>
<p><strong>How can previous periods of inflation help us understand what’s happening right now?</strong></p>
<p><strong>Olney:</strong> In the 1970s, the <a href="https://history.state.gov/milestones/1969-1976/oil-embargo">OPEC oil crisis</a> led to a reduction in the oil supply, which sent oil and fuel prices up. And that was, again, a supply restriction. At the time, that led to increases in the prices of many things because fuel was an important ingredient in so many things that we produced, and inflation took off.</p>
<p>So that’s the historical period that I think is particularly relevant because it leads into how our expectations of inflation are changing. There is a <a href="https://data.sca.isr.umich.edu/">survey</a> that’s conducted every month where folks from the University of Michigan go out and ask a bunch of consumers what they think the inflation rate is going to be in the next month and the next year. Those answers are called our <a href="https://fred.stlouisfed.org/graph/?g=SppN">“inflationary expectations.”</a></p>
<p>The <a href="https://research.stlouisfed.org/publications/review/2005/04/15/origins-of-the-great-inflation/">inflation of the 1970s</a> followed a 15- to 20-year period of stable inflation, where people’s answers to that question had not changed much from month to month. This episode we’re going through right now is following <a href="https://www.usinflationcalculator.com/inflation/historical-inflation-rates/">30 years of stable inflation</a>, where people’s answers to that question have not changed much from month to month either. And so, the parallels are rising prices, driven at first by supply constraints, as well as people’s inflationary expectations. People are expecting a higher inflation rate than they were a few months ago. </p>
<p><strong>Who is responsible for reducing inflation, and what tools do they have?</strong></p>
<p><strong>Olney:</strong> The primary agency in the United States for fighting inflation is the Federal Reserve. The <a href="https://www.federalreserve.gov/monetarypolicy/reserve-balances.htm">tool</a> that the Federal Reserve has is <a href="https://doi.org/10.1080/00036840600749623">changing interest rates</a>. There are some regulatory agencies that may be able to adjust their regulations and bring prices down a little, but the real changes that matter are the Federal Reserve and its use of interest rates. The Federal Reserve will either slow the economy by increasing interest rates, or boost the economy by decreasing interest rates.</p>
<p><strong>What stabilized prices after that similar period in the 1970s?</strong></p>
<p><strong>Olney:</strong> The Federal Reserve broke that inflation by undertaking extraordinarily tight, conservative and <a href="https://www.businessinsider.com/personal-finance/what-is-contractionary-monetary-policy">contractionary monetary policies</a>. They <a href="https://www.businessinsider.com/every-interest-rate-cycle-since-1970s-2015-12#august-7-1980-to-mid-june-1981-6">increased interest rates</a> as high as 18%. So, to get a mortgage to buy a house, the interest rates were 16% to 18%. That brought demand to a screeching halt, made the economy contract and triggered the most <a href="https://fred.stlouisfed.org/graph/?g=Scgc">severe recession</a> we’d had since the 1930s. And that reduced demand for products and led to, ultimately, a decrease in prices.</p>
<p>The other piece of the inflation puzzle is what’s happening to people’s expectations. In the early 1980s, President Ronald Reagan <a href="https://www.reaganlibrary.gov/archives/speech/address-nation-economy-february-1981">went on camera</a> from the White House and assured everyone that he was in control and the Federal Reserve was going to solve this problem. Together with the changes in interest rates that caused unemployment to soar, Reagan’s reassurances led to a drop in people’s expectations that <a href="http://www.nber.org/papers/w28005">some economists believe</a> was key in lowering inflation in the early 1980s. </p>
<p><strong>Is it possible to stabilize prices without causing a recession?</strong></p>
<p><strong>Olney:</strong> A recession is when the total amount of goods and services that are produced in a month is less than it was the month before. So, the amount of goods and services that we’re producing is getting smaller and smaller, month by month.</p>
<p>What the Fed is <a href="https://www.federalreserve.gov/newsevents/speech/powell20220321a.htm">hoping to do</a> is slow the rate of increase – that’s what they mean by a <a href="https://crsreports.congress.gov/product/pdf/IN/IN11963">“soft landing.”</a> </p>
<p>So instead of increasing the production rate at, say, 2% per year from month to month, maybe we could increase it 1% per year. In that case, we wouldn’t have a recession; we would just have a decrease in the amount of growth.</p>
<p><em><a href="https://www.sciline.org/economics/inflation/">Watch the full interview</a> to hear more about how examining historical periods of inflation can help us understand what’s happening to markets now.</em></p>
<p><em><a href="https://www.sciline.org/">SciLine</a> is a free service based at the nonprofit American Association for the Advancement of Science that helps journalists include scientific evidence and experts in their news stories.</em></p><img src="https://counter.theconversation.com/content/187757/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Martha Olney does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Rising inflation rates due to supply-side factors – COVID-19, Ukraine and supply chain shortages – make countering inflation difficult for the central bank.Martha Olney, Teaching Professor Emerita of Economics, University of California, BerkeleyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1066782018-11-13T11:45:47Z2018-11-13T11:45:47ZMore American students are studying abroad, new data show<figure><img src="https://images.theconversation.com/files/244861/original/file-20181110-116853-j3uytf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Students who study abroad gain a competitive edge in the job market, research shows.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/portrait-graduating-female-student-holding-world-115841302?src=SV-5Wm2MNoK_Q0w6CsoMOw-7-17">Dan Korsmayer/www.shutterstock.com</a></span></figcaption></figure><p>Kelsey Hrubes knew she had a challenge on her hands when she visited Germany as a study abroad student back in 2015.</p>
<p>“I was forced to adapt to cultural norms I had never considered before and try to comprehend everything in a new language,” recalls Hrubes, a <a href="https://www.linkedin.com/in/kelseyhrubes/">software engineer at Microsoft</a> and 2017 Iowa State graduate in German and computer science.</p>
<p>Hrubes says if she hadn’t studied abroad and learned to adjust to new surroundings, she wouldn’t be nearly as confident as she is in her career.</p>
<p>Stories such as this are part of what’s behind the increasing number of university students who are studying abroad – many of whom are trying to gain valuable experience that will benefit them in their personal and professional lives.</p>
<p>According to <a href="https://www.iie.org/opendoors">new data</a> released Nov. 13 by the Institute of International Education, more than 332,000 U.S. students studied abroad during the 2016-2017 academic year, an increase of 2.3 percent over the previous year.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/244888/original/file-20181110-38373-19oweky.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/244888/original/file-20181110-38373-19oweky.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/244888/original/file-20181110-38373-19oweky.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/244888/original/file-20181110-38373-19oweky.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/244888/original/file-20181110-38373-19oweky.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/244888/original/file-20181110-38373-19oweky.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/244888/original/file-20181110-38373-19oweky.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/244888/original/file-20181110-38373-19oweky.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">More minority students are studying abroad than a decade ago.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/beautiful-female-backpacker-tourist-buys-ticket-507218665?src=kM--EVjXUhT40GR5_qY7iw-1-62">guruXOX/shutterstock.com</a></span>
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<p>The institute’s annual Open Doors data also show gains in study abroad among minority students, who now make up 29 percent of all American students abroad. A decade ago, that figure stood at just 18 percent.</p>
<p>As a scholar who specializes in cross-cultural knowledge, business practices and <a href="https://scholar.google.com/citations?user=9NCNmwUAAAAJ&hl=en&oi=ao">student learning by means of study abroad</a> – and as co-director of a <a href="https://language.iastate.edu/valencia/about/">summer program in Valencia, Spain</a> – I see a few factors that have likely contributed to these increases.</p>
<h2>More options and motivating factors</h2>
<p>First, there has been a huge <a href="https://ejournals.bc.edu/ojs/index.php/ihe/article/download/8005/7156">increase in funding</a> for students to go abroad. Many of those funds are directed at students with financial need or who have <a href="https://www.usatoday.com/story/news/nation/2013/10/23/boost-minority-students-study-abroad/3171991/">minority status</a>.</p>
<p>Second, there are <a href="https://www.aifsfoundation.org/pdf/Destinations.pdf">more options</a> to study abroad in a variety of places and for different lengths of time.</p>
<p>Students are also beginning to recognize on their own the benefits of experiencing other cultures for professional reasons or future career advancement.</p>
<p>Research and experience demonstrate that students who are fully immersed in cultures abroad and who learn another language are <a href="https://www.scientificamerican.com/article/foreign-language-improve-decisions/">better-equipped</a> to function in the global workforce. They become strategic thinkers and problem solvers, and excellent communicators in more than one language.</p>
<p>Many programs connect students’ disciplinary interests with an understanding of other people and cultures in order to create well-prepared and competitive students who will be global leaders in their professional fields.</p>
<p>Such an interdisciplinary focus was not always the norm in study abroad. Decades ago, faculty-led study abroad programs focused on one area, usually language study, or a particular academic discipline in <a href="https://frontiersjournal.org/wp-content/uploads/2015/09/MOHAJERINORRIS-STEINBERG-FrontiersXVII-DoesLanguageMatter.pdf">English-speaking countries</a>. Today, more students are seeking ways to take coursework in their major by combining it with <a href="https://compact.org/changingfacestudyabroad/">unique hands-on experience</a>, such as international internships or service learning experiences abroad.</p>
<p>According to the 2018 Open Doors report, Europe remains a top destination of such programs, with around 32 percent of all students choosing the United Kingdom, Italy or Spain. However, other regions such as Asia, Africa and the Middle East continue to attract attention. In 2016-2017, interest in these regions together increased by 26 percent, according to Open Doors. Much of this interest comes from students interested in working on community-based sustainability projects in fields such as engineering or agriculture.</p>
<h2>Employers value experience abroad</h2>
<p>While students now have access to more funding to study abroad and a wider selection of destinations, corporate interest is factor driving the increase in students who study abroad.</p>
<p>Several major U.S. technology firms, such as Dell, Google and Microsoft, have stressed the need to find employees who are better-equipped to understand the <a href="https://www.iie.org/employability">global marketplace</a>. Study abroad, particularly programs in which students <a href="https://hbr.org/2012/08/speak-to-global-customers-in-t">learn another language</a>, help achieve that end.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/244889/original/file-20181110-116853-11i7468.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/244889/original/file-20181110-116853-11i7468.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/244889/original/file-20181110-116853-11i7468.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/244889/original/file-20181110-116853-11i7468.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/244889/original/file-20181110-116853-11i7468.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/244889/original/file-20181110-116853-11i7468.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/244889/original/file-20181110-116853-11i7468.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Research shows international experience gives graduates a leg up in the job market.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/young-female-candidate-laughing-job-interview-743911858?src=xVHHmlnOINVVpPVg2JX8Jw-1-31">Mangostar/www.shutterstock.com</a></span>
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<p>My <a href="https://works.bepress.com/chad_gasta/27/">own research</a> over 10 years shows that students who study abroad are better critical thinkers and problem solvers, more entrepreneurial and have better communication skills. They are also more tolerant and understanding. They have a greater appreciation for the arts, social issues and world events. They gain more insight into themselves and their lives.</p>
<p>Study abroad makes students <a href="https://money.cnn.com/2013/10/30/news/economy/job-skills-foreign-language/index.html">more marketable</a> for top jobs. And students are now reporting that their experience abroad is one of the first things they are asked about in <a href="https://www.insidehighered.com/quicktakes/2017/10/02/survey-study-abroad-tool-land-jobs">job interviews</a>. In fact, students who study abroad for a meaningful period of time make as much as 20 percent <a href="https://www.economist.com/prospero/2014/03/11/johnson-what-is-a-foreign-language-worth">more money</a> over the course of their careers. Additionally, students in many fields are <a href="https://www.iie.org/Research-and-Insights/Publications/Gaining-an-Employment-Edge---The-Impact-of-Study-Abroad">promoted</a> at a faster rate, and they are likely to get prime international assignments, perhaps in <a href="https://www.iesabroad.org/system/files/2008%20JSIE_How%20SA%20Shapes%20Global%20Careers%20%28Norris%2C%20Gillespie%29.pdf">more than one country</a>.</p>
<p>College graduates routinely acknowledge that their time abroad was one of the most <a href="https://www.iesabroad.org/study-abroad/benefits/alumni-survey-results">important and beneficial things</a> they did as a student. The thought of an international career is almost too good to pass up. Given such factors, participation in study abroad programs, particularly by minority students and women, should continue to grow.</p><img src="https://counter.theconversation.com/content/106678/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Chad M. Gasta does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In an effort to get a competitive edge in the global jobs market, more US college students are choosing to get international experience, an expert on study abroad says.Chad M. Gasta, Professor of Spanish and Chair, Iowa State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/851752017-10-05T19:05:12Z2017-10-05T19:05:12ZThe government’s new gas deal will ease the squeeze, but dodges the price issue<figure><img src="https://images.theconversation.com/files/188927/original/file-20171005-2140-liopt8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The government has so far refrained from putting a legal limit on LNG leaving our shores.</span> <span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File%3AAlto_Acrux_Departs_Darwin_in_June_2012_(7501108978).jpg">Ken Hodges/Wikimedia Commons</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>The <a href="https://theconversation.com/price-still-up-in-the-air-as-gas-producers-sign-supply-deal-85082">deal signed this week</a> by the federal government and the nation’s biggest three gas producers will ease Australia’s gas supply squeeze, but it will do nothing to address the current high prices.</p>
<p>Under the contract, Shell, Origin and Santos have agreed to supply more domestic gas to avert the <a href="https://theconversation.com/big-gas-shortage-looming-but-government-stays-hand-on-export-controls-84610">predicted shortfall for 2018</a>. </p>
<p>In so doing, the government seemingly sidestepped the need to trigger its own powers to forcibly restrict gas exports. </p>
<p>Sighs of relief all round, then. But here’s the thing: neither the new deal, nor the legislation that governs export controls, actually addresses the issue that is arguably most important to consumers – the high prices Australians are paying for their gas. </p>
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<a href="https://theconversation.com/to-avoid-crisis-the-gas-market-needs-a-steady-steer-not-an-emergency-swerve-84701">To avoid crisis, the gas market needs a steady steer, not an emergency swerve</a>
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<p>Australia has vast gas resources, and yet somehow we find ourselves with <a href="source%20link">rising prices</a> and a forecast shortfall of <a href="https://www.aemo.com.au/-/media/Files/Gas/National_Planning_and_Forecasting/GSOO/2017/2017-Gas-Statement-of-Opportunities---Update.pdf">up to one-sixth of demand</a> in the east coast gas market in 2018.</p>
<p>This is partly understandable, given that <a href="https://www.iea.org/publications/freepublications/publication/WorldEnergyOutlook2016ExecutiveSummaryEnglish.pdf">rising global demand</a> has fuelled a lucrative export market. The primary destination is Asia, which will assume <a href="https://www.iea.org/publications/freepublications/publication/WorldEnergyOutlook2016ExecutiveSummaryEnglish.pdf">more than 70% of global demand</a>. In geographical terms this puts Australian exporters in a very strong position, and by 2019 Australia is forecast to supply 20% of the global market – up from 9% today.</p>
<p>However, the strong global demand for liquefied natural gas (LNG) does not in itself provide the full explanation for rising gas prices in Australia’s east coast gas market. This is caused by a weak regulatory environment. </p>
<h2>Policy levers</h2>
<p>The <a href="https://industry.gov.au/resource/UpstreamPetroleum/AustralianLiquefiedNaturalGas/Pages/Australian-Domestic-Gas-Security-Mechanism.aspx">Australian Domestic Gas Security Mechanism</a>, which took effect in July 2017, gives the federal resources minister the power to restrict exports of LNG in the event of a forecast shortfall for the domestic market in any given year. </p>
<p>This five-year provision was designed as a short-term measure to ensure domestic gas supply. If triggered, it would require LNG exporters either to limit their exports or to find new sources of gas to offset the impact on the domestic market.</p>
<p>To trigger the mechanism, the minister must follow three steps: </p>
<ol>
<li><p>formally declare that the forthcoming year has a domestic shortfall, by October 1 of the preceding year;</p></li>
<li><p>consult relevant market bodies, government agencies, industry bodies and other stakeholders to determine their view on the existing and forecast market conditions; and</p></li>
<li><p>make a determination by November 1 on whether to implement the measures. </p></li>
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<p>Any export restriction implemented under the ADGSM would potentially apply to all LNG exports nationwide, including those from areas with no forecast gas shortage, such as Western Australia. The minister does have the ability to determine the type of export restriction that is imposed. An unlimited volume restriction does not impose a specific volumetric limitation and can be applied to LNG projects that are not connected to the market experiencing the shortfall. A limited volume restriction imposes specific limits on the amount of LNG that may be exported and may be applied to an LNG project that is connected to the market experiencing the shortfall.</p>
<p>Non-compliance with the export limits imposed on gas projects would have a range of potential consequences for gas companies. These include revocation of export licence, imposition of different conditions, or stricter transparency requirements.</p>
<h2>The new deal</h2>
<p>The agreement signed with the big three gas producers effectively relieves the government of the need to consider triggering the ADGSM. As such, 2018 has not been officially declared to be a domestic shortfall year. </p>
<p>But the agreement is not grounded upon any specific legislative provision. Therefore it is essentially only enforceable against the gas companies that are parties to it. And in accordance with the private terms and conditions that those companies agree to. </p>
<p>The broad agreement is that contractors will sell a minimum of 54 petajoules of gas into the east coast domestic market (the lower limit of the forecast shortfall) and keep more on standby in case the eventual shortfall turns out to be bigger.</p>
<h2>But what about prices?</h2>
<p>The deal contains no specific provision regarding domestic pricing. So, although there will be more gas in the domestic market, this does not necessarily mean that the current high prices will drop.</p>
<p>In the short term, the provision of additional supply may curtail dramatic increases in domestic gas prices. However, the gas deal does not address the core problem, which stems from our enormous commitment to LNG exports and the connection of domestic gas prices to the global energy market. </p>
<p>Indeed, the commitments are so great that many LNG operators have had to take conventional gas from South Australia and Victoria to fulfil their export contracts. This has put significant pressure on domestic prices. </p>
<p>The unequivocal truth is that gas prices were much cheaper before the LNG export boom. The only way to achieve some level of protection for domestic gas prices is to implement stronger regulatory controls on the export market. This should involve taking account of the public interest when assessing whether export restrictions should be imposed. </p>
<p>The ADGSM legislation does not incorporate any explicit public interest test, despite the fact that gas is a public resource in Australia and gas pricing is a strong public interest issue. </p>
<p>Compare that with the United States, where public interest is a key principle in assessing whether to approve any LNG exports to countries with no US free trade agreement (such as Japan). Public interest tests in the United States involve a careful determination of how exports will affect domestic supply and the potential impact that a strong export market will have upon domestic prices.</p>
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Read more:
<a href="https://theconversation.com/want-to-boost-the-domestic-gas-industry-put-a-price-on-carbon-76517">Want to boost the domestic gas industry? Put a price on carbon</a>
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<p>The Australian government’s decision to broker a deal with gas suppliers, rather than extend the long arm of the law, means that regulators will need to keep a close eye on the gas companies to check that they are holding up their end of the bargain. </p>
<p>That job will fall to the <a href="https://www.accc.gov.au/">Australian Competition and Consumer Commission</a> (ACCC). ACCC chair Rod Simms this week warned gas suppliers to ensure that their “<a href="http://www.dailytelegraph.com.au/news/nsw/accc-puts-gas-companies-on-notice-as-pm-gets-gas-supply-guarantee/news-story/2241b1d9144d8a4a2ebeccef185fe873">retail margins are appropriate</a>”. </p>
<p>In the absence of any explicit rules compelling gas producers that signed the deal to provide clear and accurate information and adopt stronger transparency protocols, the ACCC may face a very onerous task.</p><img src="https://counter.theconversation.com/content/85175/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Samantha Hepburn does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>By signing an agreement with the big three producers, the government has effectively made the east coast gas shortage evaporate. But there’s no guarantee the price pain will go away too.Samantha Hepburn, Director of the Centre for Energy and Natural Resources Law, Deakin Law School, Deakin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/804012017-07-12T14:19:35Z2017-07-12T14:19:35ZAfrica’s tropical forests could be next in line as global food demand grows<figure><img src="https://images.theconversation.com/files/177051/original/file-20170706-26471-xk2j6e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A farmer carries cocoa pods at a farm in Agboville, Cote d'Ivoire.</span> <span class="attribution"><span class="source">Luc Gnago/Reuters</span></span></figcaption></figure><p>At a bare floored restaurant on the edge of the <a href="https://www.awf.org/landscape/dja">Dja Faunal Reserve</a> in Cameroon, I asked the owner what there was to eat. She gestured to a poster on the wall. It was an illustrated guide of 44 animal species under threat from poaching and over-hunting, but for the restaurant it served as a menu. Each animal she pointed to was available to order.</p>
<p>The Dja, and other forests in Central Africa’s Congo Basin, are a breadbasket for millions of people living in the region. At <a href="http://globalforestatlas.yale.edu/region/congo">nearly 2 million</a> square kilometres, the area of tropical forest in the Congo Basin is the second largest in the world after the Amazon. Besides supplying bushmeat, these forests <a href="https://www.worldwildlife.org/places/congo-basin">provide</a> building materials, medicine, wild fruits, vegetables and spices. They also regulate the <a href="http://rainforests.mongabay.com/0906.htm">local climate and flow of water</a>, play an important role in soil conservation by retaining <a href="http://www.bbc.co.uk/schools/gcsebitesize/geography/ecosystems/tropical_rainforests_rev2.shtml">soil fertility and preventing erosion</a> and <a href="http://www.fao.org/docrep/w0312e/w0312e06.htm">cycling nutrients</a> for crops grown under their shaded canopy. These forests are also <a href="http://carpe.umd.edu/Documents/2005/focb_aprelimassess_en.pdf">home to</a> thousands of endemic plant and animal species, including the <a href="http://video.nationalgeographic.com/video/okapi">okapi</a>.</p>
<p>While these forests have long been threatened by <a href="http://blog.cifor.org/11433/under-threat-deforestation-pressure-on-congo-basin-forests-increasing?fnl=en">logging</a>, <a href="http://globalforestatlas.yale.edu/congo/forests-and-logging/bushmeat-hunting">over-hunting</a>, and <a href="https://earthobservatory.nasa.gov/Features/Deforestation/deforestation_update3.php">small-scale subsistence farming</a>, they remain mostly intact relative to other parts of the tropics like the Brazilian Amazon or Indonesia. </p>
<p>But there are rising concerns that trends in rapid deforestation across the Amazon and Southeast Asia <a href="http://www.stanforddaily.com/2017/04/05/stanford-study-examines-extent-implications-of-african-deforestation/">could spread to Africa</a>. </p>
<p>In particular, some worry that continued demand for commodity crops will lead to <a href="http://www.nytimes.com/2010/12/22/world/africa/22mali.html?mcubz=0">large-scale agricultural expansion</a> in Africa where it’s estimated, that <a href="http://www.sciencedirect.com/science/article/pii/S0306919214000761">50%-67% of the land suitable for agriculture</a> is still forest.</p>
<p>To date, agricultural expansion in sub-Saharan Africa has mainly been driven by small-scale subsistence farmers. Yet since 2005, 22.7 million hectares of land in sub-Saharan Africa has been <a href="http://www.mdpi.com/2073-445X/4/3/869/htm">acquired</a> by large-scale landholders. </p>
<p><a href="http://iopscience.iop.org/article/10.1088/1748-9326/aa6509">We examined</a> recent trends in domestic and export-oriented agricultural expansion in sub-Saharan Africa. Our aim was to establish whether patterns are changing and to identify countries at risk of expansion into tropical forests.</p>
<p>Our results indicate that although cropland expansion in sub-Saharan Africa is still dominated by production for domestic markets, there’s evidence of a growing influence of global markets on change in land use across the region. We believe it’s not too late to introduce policies that take this into account, and protect Africa’s rainforests from the same levels of destruction seen in Asia and Latin America.</p>
<h2>Deforestation</h2>
<p>Globalisation has transformed the way markets operate. Low-cost and more efficient modes of <a href="http://www.nber.org/reporter/spring01/hanson.html">production</a> far from consumers have supported a steady increase in international investments. As part of this trend, the availability of cheaper land and labour <a href="http://www.pnas.org/content/108/9/3465.full">in the tropics</a> is attracting investors interested in food, fibre and bio-fuel production. This pattern of land use change has resulted in tropical forests becoming frontiers of conversion for commodity crop agriculture.</p>
<p>By 2004, Brazil’s deforestation rate surged to <a href="http://www.reuters.com/article/environment-amazon-dc-idUSN169836020080117">over 27 thousand</a> square kilometres of forest loss per year as a result of expanding soy fields and cattle pastures driven by global beef demands. That equates to losing a portion of the Amazon every year comparable to the size of Rwanda. As <a href="http://science.sciencemag.org/content/344/6188/1118.full">rapid policy responses</a> led to the reduction of deforestation in Brazil, Indonesia <a href="http://www.pbs.org/newshour/rundown/indonesia-reaches-highest-deforestation-rate-worldwide/">became</a> the country with the highest rate of deforestation in 2011. The main culprit was rapid <a href="http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0159668">oil palm expansion</a> driven by global vegetable oil demands.</p>
<p>Africa has not yet seen these levels of agricultural expansion associated with foreign demands. But recent trends suggest it could be on the way. For example, cocoa, the <a href="http://iopscience.iop.org/article/10.1088/1748-9326/aa6509">fastest expanding export-oriented crop</a>, increased at a rate of 132 thousand hectares per year across the whole continent. This amounted to <a href="http://iopscience.iop.org/article/10.1088/1748-9326/aa6509">57% of the global cocoa expansion</a> in 2000–2013. </p>
<p>Of particular concern is the potential threat to the Congo Basin. We found four Congo Basin countries, as well as Sierra Leone, Liberia, and Côte d’Ivoire to be most at risk in terms of deforestation from agricultural expansion. These countries average 58% forest cover with only 1% of available cropland outside forest areas. Over 80% of foreign investment in these countries was concentrated in oil palm production, with a median investment area of 41 thousand hectares.</p>
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<img alt="" src="https://images.theconversation.com/files/177049/original/file-20170706-5026-43iksy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/177049/original/file-20170706-5026-43iksy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/177049/original/file-20170706-5026-43iksy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/177049/original/file-20170706-5026-43iksy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/177049/original/file-20170706-5026-43iksy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/177049/original/file-20170706-5026-43iksy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/177049/original/file-20170706-5026-43iksy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">A fire set by a farmer burns the roots of a tree to kill it inside the protected Gouin-Debe Forest, Cote d'Ivoire.</span>
<span class="attribution"><span class="source">Reuters/Luc Gnago</span></span>
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<p>But unlike recent trends in South America and Southeast Asia commodity crop expansion in sub-Saharan Africa does not appear to be driven by large-scale, industrial plantations – at the moment. For example, since 2000 oil palm expansion has accelerated in Cameroon, Côte d’Ivoire and the Republic of Congo. Yet our analysis on Cameroon suggests that expansion is largely driven by small- and medium-scale farmers. Over 83% of monoculture commodity crop expansion occurred outside industrial plantations. </p>
<p>Where this leaves the tropical forests of Africa is difficult to say. The landscape is largely intact with relatively low rates of deforestation. There is an opportunity to conserve this vital ecosystem before economic pressures push conservation out of reach. </p>
<p>The use of an endangered species poster as a menu illustrates the complications and trade-offs between conserving a forest for its ecosystem services and prioritising the urgent development needs of nearby communities. Additional agricultural pressures from global food demands could further complicate these trade-offs.</p><img src="https://counter.theconversation.com/content/80401/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Elsa Ordway received funding for this work from the National Science Foundation Graduate Research Fellowship Program (Grant No. 2012118590), the Stanford Global Development & Poverty Initiative, Morrison Institute for Population and Resource Studies, Stanford Center for African Studies Graduate Fellowship Program, and a McGee-Levorsen Research Grant. Research was also supported through the Center for International Forestry Research Internship Program.</span></em></p>There are rising concerns that rapid deforestation across the Amazon and Southeast Asia could spread to Africa. The continent hasn’t yet seen vast agricultural expansion but it could be on the way.Elsa Ordway, PhD candidate, Earth System Science, Stanford UniversityLicensed as Creative Commons – attribution, no derivatives.