$100 Billion in Consumer Surplus from Fracking

by on June 27, 2012 at 9:34 am in Data Source, Economics | Permalink

Energy production is one of the few bright spots in the American economy. A back of the envelope cost-benefit calculation from a Yale-associated group estimates that recent increases in shale gas production have been worth just over $100 billion annually to US consumers. In comparison, the authors estimates that groundwater contamination costs $250 million per year, a 400 to 1 benefit to cost ratio. The calculation is crude and the authors do not take into account environmental benefits from using natural gas over coal but the ratios are of interest.

Hat tip: Carpe Diem.

1 Yancey Ward June 27, 2012 at 9:41 am

The cynic in me thinks the campaign against fracking has little to do with water contamination. 10 years ago, the push was to force utilities into the use of gas over coal because the environmental movement was convinced that this would prove a constraint on electrical generation in the US (the US appeared to have far more coal than gas), but the increases in gas production due to the fracking revolution have undercut this campaign, and now gas is considered a dirty power source by the environmental movement.

2 NAME REDACTED June 27, 2012 at 11:59 am

Correct. The green movement isn’t anti-gas now so much as they are anti-industry.

3 Frank June 27, 2012 at 3:36 pm

Unfortunately, this seems to be it. There are truly insightful environmentalists that delineate cost-and-benefit, coincidentally they’re also economists, but they’re relatively few and far between.

A fair number of environmentalists are reflexive NIMBYists who’s purview is the planet at large.

4 dead serious June 27, 2012 at 4:08 pm

Let’s start probing three quarters of a mile or so under your house and see what’s what. Sound good?

5 The Anonymouse June 27, 2012 at 4:20 pm

I’ll sell you the rights to do that, sure.

Extra-bonus when it makes my utility bills go down.

6 dead serious June 27, 2012 at 4:45 pm

Not to mention your foundation.

7 Bender Bending Rodriguez June 27, 2012 at 9:54 pm

Check out what USGS is saying:

http://ny.water.usgs.gov/projectsummaries/CP30/Marcellus_Presentation_Williams.pdf

The geology of the Marcellus shale deposits is like a layer cake, with 4000 feet and ~ 4 strata separating the gas-bearing layer from the top layer where your house/groundwater is.

Groundwater isn’t contaminated by what comes up from fracking, it’s from the vertical shaft that goes through the aquifer.

8 The Original D July 4, 2012 at 9:31 pm

There are no rights to sell. Problems with fracking come from adjacent properties.

9 TallDave June 27, 2012 at 7:58 pm

Yep, it’s the same anti-science agenda we see in opposition to GMO food, nuclear power, animal testing, etc.

10 dead serious June 28, 2012 at 12:07 am

Because all science is good science.

11 dead serious June 28, 2012 at 12:57 am

Frankly, I’d rather roll the dice with nuclear power rather than fracking – as long as the radioactive waste is dumped in your backyard of course.

Or are you some kind of whiny NIMBY loser?

12 TallDave June 28, 2012 at 9:24 am

Yes, yes, you hate science, we get it. Enjoy your sustainable mud hut and Gaia worship.

13 Andrew' June 27, 2012 at 6:20 pm

It’s all ground water and the fact that energy and water are the key factors in food production.

http://www.sustainabletable.org/issues/energy/
“A 2002 study from the John Hopkins Bloomberg School of Public Health estimated that, using our current system, three calories of energy were needed to create one calorie of edible food.”

If we are having to crack the planet to squeeze out the last bits of energy we’d better be thinking seriously. The solution isn’t to leave the stuff in the ground, but it is probably to use some of it to create a less constant-energy-input intensive food system.

14 doctorpat June 27, 2012 at 11:00 pm

If that was true then as soon as wind power began to be widely adopted the environmentalists would have suddenly turned against that too.

Hmm….

15 swan June 28, 2012 at 5:25 am

Yeah so when ever that happens, we’ll see how it plays out.

16 TallDave June 28, 2012 at 10:45 am

Ted Kennedy is way ahead of you.

17 Steven Kopits June 27, 2012 at 9:51 am

I’m not sure that there has been a single case of groundwater contamination resulting from fracking. There has been from poor completions (improper installation or cementing of the well casing (pipe)). And probably you’ll get occasional leakage from retention ponds and the occasional spill related to trucking. But to the best of my knowledge, none from fracking itself.

18 Ray Lopez June 27, 2012 at 11:27 am

I suspect that your logic is like saying in theory there should be zero spills from carrying oil, either by tanker or by pipeline. After all, fracking fluid is organic (it comes from a bean) and therefore not poisonous. But in practice oil tankers fracture and pipelines burst. As for 400:1 ratios, this is a first order approximation, that should not be taken as a final word. The ratio could drop two orders of magnitude and besides, the more cheaper energy you have, the more waste so the Marginal Cost goes up just as quickly. A better solution is to raise taxes on energy so it is not wasted and helps us transition to alternative energy. Most of this energy will end up powering space heating which can be solved by wearing a sweater, or for even cheaper electricity which if cheap enough is just turned into aluminum. Does nothing for TFP.

19 GW June 27, 2012 at 11:46 am

One ingredient used in some portion of fracking fluids is produced from a bean, but these fluids are composites, and the precise compositions of those compounds are not publicly known but are proprietary secrets. As long as those fluid formulae are secret and not subject to testing, any statement about potential hazards or poisons or lack thereof must be questioned.

If there is groundwater contamination and its costs are only $250m/year as opposed to the $100b/year advantage the authors claim, then then fracking firms should be readily willing to pay for any clean-up and we ought to be seeing plenty of good-will generating PR to this effect, but in the absence of such efforts and PR, it is reasonable to suspect that the firms have internal calculations that contradict these conclusions.

20 srbaker June 27, 2012 at 12:00 pm

Or the fracking firms know that if they admit there is occasionally ground water contamination, legislation will be passed in many jurisdictions to completely ban the practice, even if the benefits vastly outweigh the harm

21 msgkings June 27, 2012 at 12:49 pm

+1 to srbaker

The opposition to fracking is mostly hysterics.

22 Mark Thorson June 27, 2012 at 12:26 pm

The composition of any particular fracking fluid is proprietary, but the general principles of fracking fluid formulation are extensively documented in the patent literature. If you’re interested in any particular fluid, the MSDS will provide a significant amount of detailed information about that fluid’s composition.

23 Dan June 27, 2012 at 1:16 pm

That $100B is CONSUMER SURPLUS from falling prices, not industry profit

24 lupus400 June 28, 2012 at 3:56 am

It is also a figure pulled out of their a**es, by assuminhg a slope of a demand curve…

25 Annette June 28, 2012 at 4:15 pm
26 Jeff June 27, 2012 at 11:58 am

I’m not sure if a resident cares if their water well was contaminated by the fracking process itself versus the process used to build a well casing. Their water is fucked regardless and its because of hydraulic fracturing (or its components).

27 Steven Kopits June 27, 2012 at 12:40 pm

Residents will care if their water is contaminated. However, the question is whether fracking is inherently dangerous to drinking water. The answer appears to be ‘no’, because the frack is usually thousands of feet below the water table and insulated from it by a mile of rock. The fractures, for this same reason, tend to propagate horizontally, not vertically, from the well. And keep in mind, many water tables are already characterized by natural hydrocarbon contamination. Drake found his Pennsylvania well at 70 ft–right at water table depth. (Fracking today in the Marcellus occurs at 5,000 ft or so.)

Fracking fluids are overwhelmingly water and sand (proppant). In addition, it will contain some gels, biocides and anti-scaling compounds, depending of the region. None of this is particularly horrific, and Haliburton has sought to develop a suite of fracking fluid constituents that are essentially food additives. The guar beans are part of that. Fracking, keep in mind, is really a mechanical, not chemcial, process. You’re cracking the formation rock with water pressure. The chemicals are there to facilitate flow, primarily. If you want the full list of fracking additives, either PA or NY DEP has a pretty comprehensive list, as I recall.

Also, produced water may contain naturally occuring contaminants like mildly radioactive rock. You wouldn’t want to drink it, but it shouldn’t make you glow in the dark, either. As with other produced water constituents, needs to be disposed of properly.

Protecting drinking water from poor completions is a matter of good process. Your water could be similarly contaminated from a truck carryring heating oil. So there’s nothing special about fracking, but proper process needs to be applied, as with trash collection and disposal, lawn fertilizing, salting of roads in the winter and handling of restaurant or garage oil.

Water disposal is generally re-injection, sometimes treatment at specialized facilities, sometimes at public facilities. There have been some issues at municipal facilities. Re-injected water is send deep, usually into exhausted oil wells which, of course, already have hydrocarbon “contamination”. For example, the Marcellus produced water is generally sent for re-injection to Ohio.

The reported earthquakes are related to re-injection, not fracking. A recent report found them essentially harmless, although I suspect we’ll see more analytical work developed on the topic.

28 Alex' June 27, 2012 at 3:16 pm

Nice, somebody who knows what he’s talking about

29 not serious June 28, 2012 at 10:54 am

That’s just great, people are raping Gaia and you give us a bunch of sciencey talk.

How about we stick a fracking pipe in YOU and see how YOU like it??

You plutocrats make me sick.

30 Mrs. Davis June 27, 2012 at 10:21 am

The study assumes a price of $5.00/mcf based on 2010 research. But the current price is $3.00/mcf, so the benefit to consumers at the current price is even greater than that calculated in the paper.

31 Michael June 27, 2012 at 11:24 am

On the flip side, it’s also assuming that crude oil costs $100 a barrel. It’s below that these days. That swings the calculation the other way. (as it’s [Price of Crude – price of gas/mcf*6]*1M barrels per day * 365 days. )

I’m not sure where they get the number that natural gas will replace 1 million barrels of crude oil a day (or how reasonable that number is).

On the cost side, it reads to me like they’re mostly saying, “if there’s a spill someone will shovel it up and put it in a landfill,” and that this won’t be too expensive.

One could probably debate every single number in the paper and also probably come up with a long list of potential costs and benefits that are being overlooked as well as other second-order and more general equilibrium effects.

Overall, I agree that it truly is a “back of the envelope” calculation. I’d classify it as a “somewhat reasonable guesstimate,” and wouldn’t recommend anyone really tout any of their numbers too much.

Sometimes I sit in on undergrad presentations for an environmental economics class where the students do very similar analysis. This is on par with the sort of number-crunching one sees among the better undergrads. It’s a decent attempt to get some fairly decent numbers and do some fairly basic cost-benefit analysis. It’s a decent starting point, but I wouldn’t use it as the basis for major policy decisions.

32 Mrs. Davis June 27, 2012 at 3:38 pm

The difference is that the price of gas fell because of expanded supply; the price of oil from reduced demand. The oil demand will return; The supply of gas will continue to expand.

33 Nate June 27, 2012 at 12:28 pm

Unfortunately, the authors assumed that the 2008 price would continue to be the going rate for gas absent shale gas production. However, using 2008 as your price is cherry-picking since there were a few factors that caused prices to fall from 2008’s highs (that pesky little recession, for one….). False attribution of shale to price decreases is the flaw in this paper.

34 ptuomov June 27, 2012 at 10:26 am

The rumors circulating the internet say that Gazprom is funding the US anti-fracking activists. Take it what it’s worth, certainly not claiming that’s true or even from a credible source. Still, it would make sense, because with fracking the US can force Russia and Gazprom to their knees by exporting nat gas to Asia.

35 Alex' June 27, 2012 at 10:34 am

Gazprom’s almost definitely been backing European anti-fracking movements. Ironic because Gazprom’s been pracking tight oil since 2007.

36 NAME REDACTED June 27, 2012 at 12:00 pm

Its not just a rumor. The green movement in the west has been funded by the Russians for a very long time.

37 Querious June 27, 2012 at 1:09 pm

Citation needed.

38 economist1 June 30, 2012 at 3:45 am

It’s true- I get 100 rubles for every environmental comment I make on MR. Why else would I do it?

39 Greg June 27, 2012 at 10:48 am

“The calculation is crude”

Pun intended?

40 E. Barandiaran June 27, 2012 at 10:50 am

Alex,

Thanks for the link. May I suggest that you write a post explaining your readers how a new source of energy is taken into account by measures of welfare (producer and consumer surpluses) and national-account measures of output and income, and more important the relations between the two sets of measures. As Mrs. Davis says in her comment the price is falling and it is important that your readers understand how lower prices affect those measures.

41 libert June 27, 2012 at 10:58 am

Does this estimate include the effect on consumer surplus from the following 3 factors? I can’t tell from the abstract, and the website isn’t letting me download the paper to find out.

1) Reduced consumer surplus from the shift away from renewable fuel consumption
2) Reduced consumer surplus from the shift away from coal generation
2) Increased consumer surplus from the reduction in pollutants associated with coal generation (I suspect this is by far the largest one).

42 mobile June 27, 2012 at 11:14 am

What utility function do you have in mind where consumer surplus is reduced both by shifting away from renewable energy sources and shifting away from coal?

43 srbaker June 27, 2012 at 12:03 pm

People are substituting into gas and away from renewable/coal generation. This means that you cant just look at the price change in gas*amount of gas being used now, because other people were using other sources than high-priced nat gas.

44 libert June 27, 2012 at 12:08 pm

What srbaker said.

45 libert June 27, 2012 at 12:11 pm

Or in other words, before shifting to gas, people were getting a lot of consumer surplus from coal and renewables. Now they are getting significantly less.

If you just look at the increase in natural gas surplus, you miss the decrease in surplus in the other part of the market.

46 Mike Giberson July 5, 2012 at 10:54 am

There isn’t much substituting away from renewable generation in the short run – any wind, solar, or hydro generators that are up and running produce at such a low marginal cost that they usually run as much as possible no matter what the natural gas price is (usually transmission limits are the only relevant constraints). There has been shifts in investment away from renewable and coal power and toward natural gas generation.

47 N June 27, 2012 at 11:32 am

What do they say about risk? Japan’s cost-benefit from nuclear power looked pretty good until last year.

48 Stephen June 27, 2012 at 11:54 am

Hope that our fracking wells don’t get hit by an earthquake and then a Tsunami and then meltdown as a result.

49 doctorpat June 27, 2012 at 11:09 pm

And still end up killing nobody. What a disaster.

50 MPS June 27, 2012 at 12:06 pm

Good. None of this changes the fact that the right thing to do is to try hard to seriously price the externalities and compensate for them by targeted consumption taxes.

51 Mark June 27, 2012 at 12:12 pm

The cost estimates are clearly far from complete. The benefits all accrue immediately, while the complete set of costs (current and future, known and unknown) will continue to accrue into the distant future. Contamination is typically only discovered several years later. Superfund site cleanup costs typically swamp the production benefits, not to mention all the non-financial health and resource costs from the interim.

If anything, I think we can expect to see those costs at $250 million increasing annually over time, for an NPV quite a bit closer or beyond that benefit estimate.

52 Urso June 27, 2012 at 12:48 pm

Good point. I’m sure in the 50s and 60s the oil companies here in La. touted the “consumer surplus” they created by dredging hundreds of new canals in the swamps to get the hydrocarbons to market 20x more efficiently. 50 years later it turns out that all those canals destroyed the swamps and we’re losing dozens of acres of land a day as a result. Whoops. I hope my grandpa enjoyed his consumer surplus while it lasted.

53 mulp June 27, 2012 at 2:36 pm

But we can blame the stupid founders of New Orleans for building a city below sea level right on the Gulf coast – if they were smart, they would have built it 50-100 miles from the Gulf coast, if anyplace.

The dredging of canals and polluting the waters which killed the wetlands and moved New Orleans to the edge of the Gulf is a cost measured in accelerated depreciation in the value of the built capital of New Orleans. That increased depreciation could have been offset by using the surplus to invest in Holland style sea barriers to protect New Orleans and surrounds which maintained the capital value of the city, or increased it. But the surplus was wasted, leaving the realized depreciation to be replaced by massive capital investment in the current decade or two since Katrina.

But not to worry, the capital asset value of the petroleum being produced then has been reduced to zero,

54 Careless June 28, 2012 at 10:51 pm

Even when you’re arguing a winning case, you never fail to fail, mulp.

55 dead serious June 27, 2012 at 12:13 pm

Beyond the known water contamination issue, there is the potential ‘incites earthquakes’ issue.

56 dead serious June 27, 2012 at 12:31 pm

I’m all for fracking as long as we start by plumbing the ground underneath Alex’s house and every fracking company’s CEO’s house. Hey, it’s a 400:1 benefit:cost issue – what’s the problem?!

57 Doc Merlin June 27, 2012 at 1:36 pm

I live in Arlington, TX, near some pumps. I’m pretty sure that the ground under my house is fracked.

58 Colonel Saul Tigh June 27, 2012 at 2:50 pm

This whole gods-damned country’s fracked if you ask me.

59 economist1 June 30, 2012 at 3:46 am

Indeed +1

60 TallDave June 27, 2012 at 8:04 pm

Yeal, it’s a real fracking tragedy for those poor, poor homeowners:
——-
Working with a lawyer in nearby Marietta, the residents were able to band together to negotiate an unusually lucrative deal with the company that paid $4,000 an acre and 19 percent royalties on oil and gas production, and included safeguards to protect water and land. (The standard has been $20 to $30 an acre, one-sixth royalty rates, and no protections for water and land.)

In a region where median household income is less than $33,000, the first big flush of oil- and gas-related income produced leasing checks of six and seven figures — amounts the recipients say are a bit disorienting.

Arthur and Sharon Stottsberry, who are retired from inspector and clerk jobs with the State Department of Transportation, received $280,000 for the right to lease oil and gas reserves beneath their 70-acre farm. “It doesn’t seem real,” said Mrs. Stottsberry, 68. “We haven’t planned much about what to do. The most important thing is I want to make sure my grandkids do well.”
——-

It doesn’t seem real! My God, fracking has driven her insane!

61 dead serious June 28, 2012 at 12:27 am

Yes, awesome if you are a landowner directly benefiting from fracking. Neighbors probably aren’t as thrilled. From your linked article:

“Drilling through the solid rock for reserves a mile or more beneath the surface takes millions of gallons of water injected into wells to fracture the formations and release gas and oil, a process known as hydrofracking. Across the river, in the four-year-old shale gas fields of Pennsylvania and West Virginia, landowners have reported instances of water contamination near wells that have been “hydrofractured.” State regulators and the federal Environmental Protection Agency are investigating the causes.”

Also, this:
http://www.triplepundit.com/2012/04/new-usgs-report-links-fracking-earthquakes/

62 MD June 28, 2012 at 1:22 am

Don’t you know? The Russkies are behind that quote unquote news story.

63 TallDave June 28, 2012 at 9:21 am

Yes, except notice there’s no indication those things are related. Groundwater gets contaminated by other things all the time.

Fracking takes place far, far below groundwater levels. It’s much more likely that contaminants fell from the surface than that they traveled up from far below.

64 dead serious June 28, 2012 at 10:06 am

Right, because trapped oil and gas, once released, travels downward.

65 TallDave June 28, 2012 at 10:44 am

No, it always goes upward, which is why we mine it from the sky and not deep below the earth.

66 Silas Barta June 28, 2012 at 10:49 am

Yeah — it’s a “net gain”, as long as you don’t have to be the dude stuck with contaminated drinking water.

I haven’t heard anything about a compensation package for them …

67 mulp June 27, 2012 at 12:28 pm

So, pillage and plunder of natural capital at accelerated rates creates a consumer surplus over investing in a capital intensive sustainable energy system (solar heating instead of burning gas, wind turbines instead of gas turbine electric, highly efficient buildings instead of gas HVAC, etc) saves labor with a net savings of $100B annually which reduces labor demand which reduces consumer incomes by at least $100B.

If the reduction in incomes is spread equally among those recieving the consumer surplus, then the pillage and plunder is a wash for this generation, but unless you believe the population ends in a century or two, the pillage and plunder will yield diminishing returns to some future generation who will not only not have the gas but also not have the sustainable capital that is the alternative to the gas.

Total capital = human capital + natural capital + build capital + knowledge capital – depreciation + labor input

Is the $100B consumer surplus going to increase total capital, just maintain total capital, or decrease total capital.

And how much is natural capital depreciated to produce the $100B consumer surplus? The problem is the current price is not truly an accurate measure of the value of natural capital. The sweet crude oil extracted from the many Texas and Saudi and other oil fields for less than $40 a barrel market price today ($3 was the price control floor set by the Texas Railroad Commission in the 50s and 60s) is long gone and the sour crude that replaces it is on the market for $80 today with the diminished volume of sweet selling for $100. If the sweet crude extracted in the 50s and 60s had a price floor of $5 a barrel, would that have reduced the total increase in capital that occurred in the 50s and 60s when we had huge increases in build, knowledge, and human capital?

Is the sale of natural gas today at $2-3 creating a real jump in total capital of $4 to reflect the $4 price reduction that creates the consumer surplus?

If the only thing fracking does is increase the rate natural capital is depreciated with no surge in adding to human, build, and knowledge capital, then we are merely “borrowing” from future generation, and leaving them with a deficit they will need to deal with by increasing their labor devoted to creating capital.

Meanwhile, we have a surplus of labor that is not being used, and each year we are losing more labor that, like the fossil fuels burned each year, are gone forever.

I suppose the consumer surplus might boost Tyler’s idea of what a fair wage is for the ethnic food workers so innovative bankers will stop trying to figure out how to justify million dollar bonuses with high fees on our checking and debit cards and fees on our mutual funds and on speculation, and instead become innovative food cart vendors creating many new ethnic food that won’t make us fat to earn millions in food service. My guess is it will instead drive bankers to figure out how to capture that $100B in pumping up the prices of the same old assets so the bankers can reap billions in bonuses.

It isn’t like fracking and directional drilling and private land suddenly materialized in 2000. What happened is the price of fossil fuels soared as big oil held back investing in the 80s and 90s in attempts to arrest the plummeting energy prices, using economies of scale to drive out the small firms, and then held back expanding as they looked at how to maximize their returns on government leases which were very low priced. In the past decade, the small operators doing the specialty work for utilities returned to petroleum and did so on private land that doesn’t require the scale to bid government leases, and as they made money they reinvested in more private land deals. I see the conservatives attacking Obama because the private sector is expanding petroleum production on private land, and Obama has not been picking the winners of higher government land production. hmm, I wonder if the land owner royalty “surplus” is factored into the $100B consumer surplus – instead of energy dollars going into the pockets of Saudi princes, it is going into the pockets of American private land owners.

68 Zach June 27, 2012 at 12:41 pm

“a Yale-associated group”

What’s the point of this? First, it’s irrelevant. Second, it’s only Yale-associated in that everyone involved apparently graduated from Yale (“Yale Graduates Energy Study Group”). The most relevant affiliation is an emeritus professor of business living in Florida. A cursory Google search suggests that the group only exists in name to provide more apparent credibility and neutrality than you’d get by more accurately saying, “a group consisting of employees of energy companies, business consultants and a lawyer.” This isn’t to say that there’s anything wrong with the work, but evaluate it on its merits and not on some invented authority.

69 Jan June 27, 2012 at 9:01 pm

Their whole analysis is wrong. Externalize, delay, sell!

–Jan, Michigan Graduates Blah Blah Blog Group

70 figleaf June 27, 2012 at 6:18 pm

Hmm.

It doesn’t seem to me, then, that a .25% mitigation fee would overly burden frackers. Nor, since .25% is within the daily price fluctuation anyway, would it impose a noticeable drag on the economy.

While I personally benefit materially from fracking — not only in lower energy prices but in higher local air quality. (The advantage of gas over coal isn’t hypothetical at all to me: when gas prices are low it stops being cost effective for a local utility to run its almost completely unregulated, grandfathered, and exceptionally high-pollution coal-fired power plant nearby.) Meanwhile, though, a friend on the other side of the country has had to become vigilant about checking her well water for dissolved methane coming out of suspension in her water faucets, and of her basement filling with methane and exploding.

If, as you say, the benefit to cost ratio really is 400:1 then why on God’s green earth would anyone object to mitigation that’s nearly a rounding error compared to the overall benefit? It’s certainly no skin off my back, and it’s… sort of… a good way to keep the roof on the back of my friend’s (and her neighbor’s) houses.

figleaf

71 TallDave June 27, 2012 at 8:07 pm

I just hope your friend also checks her garden for those man-eating GMO cucumbers.

72 dead serious June 28, 2012 at 12:52 am

Thank you for exposing the libertarian/plutocratic agenda in a nutshell:

1) Preach that “the market” can solve all problems; ignore tragedy of the commons problems or wave them away with promises that the invisible hand will magically settle issues of this nature.

2) Instill (unfounded) confidence that such market mechanisms in and of themselves provide incentives for corporate actors to be honest and genuine in their dealings lest they find themselves out of business.

3) Do and say everything possible to eliminate or at least undermine regulatory bodies, hobble the government – basically anyone or anything standing in the way of an unchecked corporatist agenda.

4) Begrudgingly accept minimal recourse options for the little guy in those extremely rare cases where a corporate interest might inadvertently trample on his/her rights.

5) Once regulations are eliminated, slowly chip away at #4.

You’re a weasel.

73 TallDave June 28, 2012 at 9:18 am

Sure, it’s all fun and games till you find a GMO cucumber gnawing on the bones of the family dog.

74 marmico June 27, 2012 at 8:07 pm

I don’t get it. If aggregate expenditures equal aggregate income, then the lower consumer expenditures are off set by lower producer income and production taxes. So costs exceed benefits.

75 sam June 28, 2012 at 2:12 am

And this, class, is why you shouldn’t reason using identities.

76 marmico June 28, 2012 at 10:35 am

Well thanks sam for your reasoning ad hominen. So we should just rely on a cement guy from Lafarge that graduated from Yale. Fracked wells require lotsa cement, bozo. So the cement guy benefits while the coal guy doesn’t. What no coal guys graduated Yale. Ooops, wrong study group.

The key sentence in the study is this : “In at least this one example, involving consumer gains in one year, for one company’s production [Chesapeake, 57% of study production], the surplus of consumers is expected to exceed the producer’s costs and gains by a factor of two.” So doesn’t that mean that net consumer surplus is only $50 billion?

OK. So what about the coal guy? .

77 Hmm June 28, 2012 at 12:40 pm

Maybe the issue is that the 100 billion gained aren’t going to the people who are losing the 250 million, or that aren’t losing anything but believe they have a chance to?

78 Michael E July 1, 2012 at 11:20 am

Change is difficult. “Who Moved My Cheese

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