a and b)

Saudi Arab has been one of the largest exporters of crude oil to the US but with higher dependency on oil, imports country faced more competition and lost its domestic capabilities. Currently, the US has stopped importing crude oil to expand its domestic refineries and become economically self-reliant and exploit the global market through its own dominance. But with such trade US policies have faced negative externality in terms of pricing as the countries would offer higher prices due to supply monopoly in the energy sector. Thus it will be ideal to propose a Pigouvian tax on these suppliers so that it restricts their supply to a certain extent and the US can expand their domestic market rapidly and create demand for the domestically produced oils.

c)

It is shown in the diagram the supply of TGRs is vertical at 104.5 billion and if the administration tries to diminish the utilization of gas to 104.5 billion then Customers must have one TGR so as to get one gallon of gas, in addition to they must pay the price at the pump. Constraining TGRs viably confines the demand for gas, so the cost per gallon will fall, yet shoppers must have TGRs so as to buy gas. In the event that the market cost of one TGR is $0.75, this implies supply and demand converge at $0.75, as appeared in the graph. This sort of program controls consumption without giving the administration more income since shoppers are buying the TGRs from one another. In any case, the aggregate sum of TGRs is constrained by the administration. Those buyers trying to buy more gas than permitted by the initial allocation of TGRs can buy extra TGRs from different purchasers at the market cost of $0.75. By deciding to utilize a TGR to buy gas, a buyer acquires an opportunity cost equivalent to $0.75 since they can't sell the TGR once it has been utilized.