Advanced Search
MyIDEAS: Login to save this article or follow this journal

An institutional theory of hydraulic fracturing policy

Contents:

Author Info

  • Holahan, Robert
  • Arnold, Gwen
Registered author(s):

    Abstract

    The use of high-volume horizontal hydraulic fracturing (fracking) has increased substantially over the past five years in the United States. Use of this drilling technology to extract natural gas from hitherto impermeable shale is expected to increase even more in coming decades. Two institutions, integration contracts and well spacing requirements, evolved to mitigate the common-pool economic wastes associated with conventional oil and gas drilling. U.S. regulators have applied these institutions to fracking. However, shale plays differ geologically from conventional plays and are subject to different extractive technologies. We theorize that the point-source pollution characteristics of conventional drilling allowed integration contracts and well space requirements to minimize local negative environmental externalities as an unintended byproduct of minimizing common-pool economic wastes. The non-point source pollution characteristics of fracking, however, make these institutions insufficient to minimize negative environmental externalities associated with drilling in shale plays, because the economic waste problem is different. If policymakers understand the crucial differences between conventional oil and gas plays and shale plays and the drilling technologies applied to them, they should be better equipped to craft fracking regulatory policies that internalize problematic externalities.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.sciencedirect.com/science/article/pii/S0921800913002206
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Elsevier in its journal Ecological Economics.

    Volume (Year): 94 (2013)
    Issue (Month): C ()
    Pages: 127-134

    as in new window
    Handle: RePEc:eee:ecolec:v:94:y:2013:i:c:p:127-134

    Contact details of provider:
    Web page: http://www.elsevier.com/locate/ecolecon

    Related research

    Keywords: Common-pool resources; Energy policy; Institutional analysis; Hydrocarbon resources; Hydraulic fracturing;

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Libecap, Gary D & Wiggins, Steven N, 1985. "The Influence of Private Contractual Failure on Regulation: The Case of Oil Field Unitization," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 690-714, August.
    2. Smith, James L, 1987. "The Common Pool, Bargaining, and the Rule of Capture," Economic Inquiry, Western Economic Association International, vol. 25(4), pages 631-44, October.
    3. Tim Boersma & Corey Johnson, 2012. "The Shale Gas Revolution: U.S. and EU Policy and Research Agendas," Review of Policy Research, Policy Studies Organization, vol. 29(4), pages 570-576, 07.
    4. Wiggins, Steven N & Libecap, Gary D, 1985. "Oil Field Unitization: Contractual Failure in the Presence of Imperfect Information," American Economic Review, American Economic Association, vol. 75(3), pages 368-85, June.
    5. H. Scott Gordon, 1954. "The Economic Theory of a Common-Property Resource: The Fishery," Journal of Political Economy, University of Chicago Press, vol. 62, pages 124.
    6. Scott, Christopher A. & Pierce, Suzanne A. & Pasqualetti, Martin J. & Jones, Alice L. & Montz, Burrell E. & Hoover, Joseph H., 2011. "Policy and institutional dimensions of the water-energy nexus," Energy Policy, Elsevier, vol. 39(10), pages 6622-6630, October.
    7. Libecap, Gary D & Wiggins, Steven N, 1984. "Contractual Responses to the Common Pool: Prorationing of Crude Oil Production," American Economic Review, American Economic Association, vol. 74(1), pages 87-98, March.
    8. Rahm, Dianne, 2011. "Regulating hydraulic fracturing in shale gas plays: The case of Texas," Energy Policy, Elsevier, vol. 39(5), pages 2974-2981, May.
    9. Charles Davis & Katherine Hoffer, 2012. "Federalizing energy? Agenda change and the politics of fracking," Policy Sciences, Springer, vol. 45(3), pages 221-241, September.
    10. Wang, Jinsheng & Ryan, David & Anthony, Edward J., 2011. "Reducing the greenhouse gas footprint of shale gas," Energy Policy, Elsevier, vol. 39(12), pages 8196-8199.
    11. Kinnaman, Thomas C., 2011. "The economic impact of shale gas extraction: A review of existing studies," Ecological Economics, Elsevier, vol. 70(7), pages 1243-1249, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Philipp M. Richter, 2013. "From Boom to Bust?: A Critical Look at US Shale Gas Projections," Discussion Papers of DIW Berlin 1338, DIW Berlin, German Institute for Economic Research.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:eee:ecolec:v:94:y:2013:i:c:p:127-134. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.