Certified Energy Manager Practice Exam

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What flexibility did Order 436 provide in the natural gas market?

Increased production limits for natural gas
Allowed pipeline companies to set prices for gas
Separated pricing from transportation of natural gas
Allowed longer contracts for gas delivery

The correct answer is: Separated pricing from transportation of natural gas

Order 436 played a significant role in reshaping the natural gas market by separating the pricing structure from the transportation of natural gas. This order allowed producers to sell their gas directly to consumers or marketers independent of the pipeline operators, which in turn facilitated a more competitive and flexible market environment. By decoupling the transportation of gas from its pricing, Order 436 made it easier for natural gas producers to respond to market demand and price fluctuations. This move also helped in promoting competition among various suppliers and allowed for more efficient allocation of resources within the natural gas industry. The flexibility introduced by this separation encouraged new entrants into the market and contributed to greater innovation in gas supply and distribution. Understanding how this separation led to a more competitive marketplace is crucial when considering the broader aspects of energy management and market dynamics in the sector.