Oil Spill in Yellowstone River

  This past January a pipeline burst that runs under the Yellowstone River in Glendive, Montana. About 50,000 gallons of oil spilled into the river, affecting over 6,000 people’s water supplies. There is still no definite answer about what caused the pipeline to burst, but it is not much of a surprise to many since the pipeline is 50 years old and lies only eight feet beneath the river bed.  The Bridger Pipeline Company shut down the line after the leak was detected, but the oil still managed to flow 60 miles downstream.  Many restaurants and businesses had to shut down due to the quality of the water and some parents even kept their kids home from school.  Although Glendive was highly impacted by this spill, many locals are very supportive of the oil industry because it provides a lot of jobs and incoming money.  A big issue is that this is the second time in five years that oil has spilled into the Yellowstone River.  These types of incidents are what cause a lot of hesitation about the Keystone XL pipeline.

Two months after the spill, the Bridger Pipeline Company is preparing to resume shipments.  This raises a lot of concern considering only about 10% of the spilled oil has been recovered.  Federal regulators are declaring that the replacement section of this pipeline is installed 40 feet below the river bed to avoid incidents like this in the future.  While I understand that the pipeline company has to resume use of the pipeline at some point, I think their recovery efforts were not up to par.  Making money is obviously the company’s priority, so I’m sure they did whatever they needed to do in order to resume shipment as soon as possible.  Even with that in mind, they are the ones who own that pipeline so they should be responsible for doing as much oil recovery as possible.  The article mentioned that filters were used to remove petroleum products from the water, but the impeding ice made recovery efforts difficult.  I agree with the decision that was made to rebuild the pipeline much further below the river bed, but I think these types of decisions should be made before incidents like this occur.
--Sarah Smith

Climate Change Proposal

William Nordhaus, an economist who has long been investigating climate change issues, recently published a paper with an idea for how to combat climate change. Concerned countries should form a "club" and agree to all take action to mitigate climate change. In addition to acting to prevent climate change, the countries should also implement a tariff on all trade from countries not in the "club." The tariff would not in itself help fight climate change, but it would give outside countries a reason to want to be in the club. (Of course, once they are in the club they will have to take action to reduce climate change themselves.)

Please take a look at the paper. I will not hold you responsible for reading the whole thing, but please look it over. This is an example of a peer-reviewed paper of the type you will need for the paper you will start working on next week. In fact, it's from one of the very top (if not THE very top) journals for work in the discipline of Economics, so it carries a lot of weight among my people.

Here is another, more accessible piece by Nordhaus. You probably won't believe it after reading this, but Nordhaus was a skeptic of climate change initially. One of his early papers came to the conclusion that yes, the climate was warming, but that warming would benefit the United States, since we are a mid-latitude country. He has since revised that assessment, concluding that the costs greatly outweigh the benefits.

End of material for reading quiz 1

Reading Quiz 1, to be held on Wednesday March 25th, will cover everything posted in 2015 up through this point. Materials posted after this will be on the second quiz at the end of the semester.

New Regulations on Fracking

Although industry is upset and environmentalists sniff that they don't go far enough, the Obama administration has issued regulations on Fracking. This set of rules, which goes into effect in 90 days on Federal lands only, requires certain safeguards and tracks disposal of wastes. While this is a great start, I'm at least as interested in the regulations that are to come. According to the article linked above, we should soon see regulations on methane emissions around frack sites. If natural gas is to help reduce the emissions associated with climate change, we need to ensure that gases escaping the frack site are captured.

Cartels in the news

We talked about a few monopolies and cartels in class like OPEC and BG&E, but would you have expected a cartel in milk? They don't have a resource they control exclusively and they certainly weren't given control over something by the government. In fact, the government has fined them millions of Euros, as shown in the piece posted under Readings (on Blackboard). So how could they manage it? Hm. Sounds like an exam question.

Seafood Fraud

As a state that enjoys the benefits of a $600 million seafood industry, we in Maryland have to be aware of issues like "seafood fraud," in which fish are harvest illegally, they are unreported, and/ or are removed from unregulated waters. So-called IUU fishing "risks the sustainability of a multi-billion-dollar U.S. industry."

Today the Obama administration released its action plan to combat IUU fishing. Mostly this involves working with other countries to track products where possible and make them traceable where they aren't. It takes a lot of cooperation to efficiently use public goods!

Drought worsens

California, one of the most productive agricultural areas in the world and home to almost 40 million people, has been facing a drought for years, and rainfall through this year's wet season has been less than 20% of normal. I'd say something like "out of the frying pan" but they fell out long ago. The article linked above says that there's about one year's worth of water left in reservoirs, and calls for immediate rationing. That would mean, I assume, basically no crop production. I suppose that's good news for farmers in other parts of the world, but very bad for Californians and very bad for us consumers!

Update: the low amount of water is also spurring activity in water markets. Water markets are mostly dormant, but when things get tough, buying and selling water does happen, and I'm not talking about PET bottles! One acre foot is about 2.5 million of those little bottles, and these deals are for over 100,000 acre-feet. While it seems like a no-brainer for rice farmers to sell their water since they can make more money selling the water than they can by using the water to make rice) there are other concerns that the article points out, such as the fact that if too much gets sold, then local infrastructure for processing rice will be unable to function. In the long run, if the water continues to be needed in the urban areas, that's fine; if these are a few lean years, though, then you don't want to give up that infrastructure. We'll learn more later this year about water markets.