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Friday, February 03, 2012
12:30 PM - 1:30 PM

Taxing fracking policy discussion

Public Affairs Discussion Group at Case Western Reserve University

A few years ago the U.S. seemed to be running out of fossil fuels, and one reason to develop alternative energy sources was to end our dependence on foreign fuels. Now, suddenly, we are told the nation and particularly our region can enjoy a fossil fuel boom based on "fracking" - otherwise known as hydraulic fracturing, a process in which "a specially blended liquid is pumped down a well and into a formation under pressure high enough to cause the formation to crack open, forming passages through which oil can flow into the wellbore."

The public policy concerns raised by this new development appear to be huge in both number and significance. This week's discussion will focus on the distribution of economic costs and benefits. There are sure to be massive externalities (costs not captured by the market) and private benefits. In theory, the proper approach in such situations is correct the market failure (the people who benefit not being responsible for the costs) through taxes. This may seem especially appropriate in a state like Ohio in which promoters of fracking claim it will provide economic development, but the state government acts as if it cannot afford to address any of the social costs (if the state government even acknowledges those costs in the first place).

Recently, Policy Matters Ohio issued a report about the case for taxing fracking. Wendy Patton will join us to talk about that report.

Public Affairs Discussion Group at Case Western Reserve University A few years ago the U.S. seemed to be running out of fossil fuels, and one reason to develop alternative energy sources was to end our dependence on foreign fuels. Now, suddenly, we are told the nation and particularly our region can enjoy a fossil fuel boom based on "fracking" - otherwise known as hydraulic fracturing, a process in which "a specially blended liquid is pumped down a well and into a formation under pressure high enough to cause the formation to crack open, forming passages through which oil can flow into the wellbore." The public policy concerns raised by this new development appear to be huge in both number and significance. This week's discussion will focus on the distribution of economic costs and benefits. There are sure to be massive externalities (costs not captured by the market) and private benefits. In theory, the proper approach in such situations is correct the market failure (the people who benefit not being responsible for the costs) through taxes. This may seem especially appropriate in a state like Ohio in which promoters of fracking claim it will provide economic development, but the state government acts as if it cannot afford to address any of the social costs (if the state government even acknowledges those costs in the first place). Recently, Policy Matters Ohio issued a report about the case for taxing fracking. Wendy Patton will join us to talk about that report.

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