Daily Archives: March 25, 2011

Update: Industry, environmental group working on shale gas drilling rules

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Michael Giberson

Last November we noted that industry and environmental groups in Texas were working together on fracking disclosure rules. Earlier this month a bill was introduced in the Texas House that would establish disclosure rules for fracking fluids.

Kate Galbraith reports in The Texas Tribune, “Texas Could Require Disclosure of Drilling Chemicals“:

Hydraulic fracturing, an increasingly common method of extracting natural gas that involves shooting a concoction of water, sand and chemicals deep underground, has sparked controversy around the country — not least because drillers mostly keep their chemical formulas secret. But Texas, the leading gas-producing state, could help change industry practices by requiring public disclosure of the chemicals used.

A bill filed this month by state Rep. Jim Keffer, R-Eastland, who chairs the House Committee on Energy Resources, would create a website containing information about the chemicals used in each well. The bill has won praise from both industry and major environmental organizations including the Sierra Club, the Texas League of Conservation Voters and the Environmental Defense Fund (EDF). [Links in original.]

See also this story from the Fort Worth Star-Telegram.

In related news, the Texas Railroad Commission (which regulates oil and gas production in Texas) had harsh comments for the federal Environmental Protection Agency as the Railroad Commission voted to clear Range Resources of charges that it had contaminated water wells in Parker County, Texas. EPA concluded otherwise in a December 2010 “endangerment order.”

I suspect this fight isn’t over. Two of the three current Railroad Commissioners are among state politicians considering a run for the U.S. Senate seat of retiring Sen. Kay Bailey Hutchison. Fighting the EPA helps keep the commissioners in the news.

 

The ATT/T-Mobile merger and spectrum policy

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Lynne Kiesling

Alex Tabarrok made some comments on the proposed ATT/T-Mobile merger that reflect my own thinking on the subject: a la Williamson, the benefits of the cost savings from the merger may well exceed the reduction in consumer surplus from any price increase arising from going from 4 national competitors to 3. Alex also observes, correctly, that an open market for spectrum would be likely to be a more efficient way than mergers to achieve spectrum rights reallocation. Because make no mistake about it, this merger is about spectrum rights primarily, and cost savings secondarily.

I would amplify Alex’s observation, though, by adding in a dash of Coase and doing so in the “but for” style of analysis that is often used in antitrust analysis. Alex observes that

What really needs to be done is to auction off as much spectrum as possible with as few restrictions on it use as possible. Let the market allocate spectrum across all uses, allowing value maximizing trades. More spectrum would not only be good in itself it would alleviate any concerns about the merger.

I would go further. But for the unnecessarily bureaucratic government process of spectrum allocation, it may be that such a concentration would never have arisen in the wireless industry. The long-standing lottery-based allocation, combined with the unwillingness to treat initial allocations to military, TV/radio broadcasters, etc. as actual alienable property rights, has stranded spectrum in low-value uses from an economy-wide perspective while giving rights holders every incentive to use lobbying and other political means to protect their low-value allocation, since they have no alternate means of making money off of the rights. Thus the absence of a market for spectrum has reduced the supply and increased spectrum’s relative scarcity. Furthermore, the structure of the spectrum auctions of the past 15 years has contributed to consolidating ownership of the parcels that have been opened.

Poor spectrum policy has contributed to the market concentration that is likely to be the subject of DOJ investigation … but I don’t expect the DOJ to come back with a recommendation that we institute a more intelligent spectrum policy, along the lines that Alex suggests.