Tag: Econ 280

For Whom Does the IPCC ‘Tol’?

I probably have more thoughts on this than I will convey here, but I have seen a number of unusual items related to the economics of climate change.  First, a few weeks ago I saw that University of Sussex economist Richard Tol had begged off the Intergovernmental Panel on Climate Change because he disagreed with how the recent IPCC technical report was translated into “journalist speak” in the Summary for Policy Makers (SPM).  The SPM takes several thousand pages of technical reports and boils them down to an Executive Summary in the 25-50 page range.

From The Guardian we have this: “Richard Tol told Reuters he disagreed with some findings of the summary to be issued in Japan on 31 March,” and the story follows up with some choice quotes from Professor Tol:

The drafts became too alarmist…. It is pretty damn obvious that there are positive impacts of climate change, even though we are not always allowed to talk about them…. They will adapt. Farmers are not stupid.

Okay, here is a rebuttal from an IPCC co-author.

Of the 19 studies he surveyed only one shows net positive benefits from warming. And it’s the one he wrote,” said Bob Ward, policy and communications director of the Grantham Research Unit on Climate Change and the Environment at the London School of Economics.

More on Tol later.

Meanwhile, Harvard’s Robert Stavins — a giant in environmental economics, really — has come out and publicly harangued the IPCC over its SPM saying “the resulting document should probably be called the Summary by Policymakers, rather than the Summary for Policymakers” (his emphasis).   Professor Stavins is specifically addressing the part of the report that he helped coordinate, and is very clear that it is the SPM, not the chapter it is based on, that he takes issue with.

As someone in teaching environmental economics year in, year out, I can say I am a more than a little distressed that some top-flight economists are worrying about the politicization of the IPCC SPM.

Now back to Professor Tol, who is author of a very influential piece in the 2009 Journal of Economic Perspectives, “The Economic Effects of Climate Change,” that evidently contained some errors.  Here’s Tol in “”Correction and Update: The Economic Effects of Climate Change” from the most recent JEP:

Gremlins intervened in the preparation of my paper “The Economic Effects of Climate Change” published in the Spring 2009 issue of this journal. In Table 1 of that paper, titled “Estimates of the Welfare Impact of Climate Change,” minus signs were dropped from the two impact estimates…

Gremlins, wow.  I guess that’s putting a good face on publishing erroneous data in the profession’s flagship journal.   Here’s the updated figure:

Tol Climate Change

 

The Figure is from the JEP article (click for a bigger image); the “hipster economist” reference is here.

The kerfuffle over the figure is that the little dots represent the central estimates, and most of the estimates show negative impacts on GDP.  The glaring exception is Tol’s own estimate of a 2.3% increase at 1 degree (C) of warming, which likely accounts for the shape of the fitted curve (the other study he reports with 1C warming estimates  a loss of -0.4% of GDP).  As the quote critical of Tol says that “of the 19 studies he surveyed only one shows net positive benefits from warming. And it’s the one he wrote.”  That appears to be approximately accurate, though there is one other study that estimates zero to 0.1% increase at 2.5 degrees warming.  

The larger issue is probably that the economic impacts simply aren’t as big as one would think.  Of the 20 studies Tol cites, about half look at 2.5C of warming, and the average impact on world GDP among these studies is about a 1% of world GDP.

Unfortunately, most studies haven’t gone out very far past that, and I would guess that most people who have looked at carbon emissions and projected temperature increases believe the impacts will exceed 2.5C, and no matter who you ask, damages appear to be increasing at an increasing rate at that point.

The link to the article is above, and all the data from the article are available here.  Tol has a more complete essay on his views in the Financial Times.

In Which The Atlantic Monthly Sees the Light

The cover of the May Atlantic Monthly states flatly that  “We Will Never Run Out of Oil.”

In its typically exhaustive style, The Atlantic takes a few thousand words to come to this conclusion.

This, of course, is what pretty much any off-the-shelf economist has been saying for years, though we didn’t need a series of enormous technologically driven supply shocks to lead us down the path to that conclusion.  Here’s Tim Haab on why Peak Oil doesn’t matter if markets are at all functional.  Here’s a peek at oil futures.

Oh, and by the way, Peak Oil?

‘The Benefits are the Costs’ and Other Links

I’m just going through a backlog of interesting stories to share with my Econ 280 class.  First up, Jonathan Adler points us to a short story on a residential subdivision’s successful legal challenge to the construction of a home windmill.  The residents of a the Forest Hills subdivision just outside of Carson City, Nevada, argued that the proposed windmill would sully their sight-lines and provide interminable noise from the turning of the rotors. This is a solid example of what Shavell would call an ex ante property rule, and you can read all about it in the Las Vegas Sun.  

Speaking of benefits, the fall Journal of Economic Perspectives has another symposium on contingent valuation.  Twenty years ago, Peter Diamond and Jerry Hausman famously asked, “Is Some Number Better than No Number?”   Although Hausman seems to have found some clarity on the issue, I’d say for the profession the question remains unresolved.

Next up in the news, we have a consortium  of cities and businesses is looking at a $200 million reservoir project to satisfy all its water needs, but it is contemplating paying rice farmers $100 million not to farm instead.

Is this Coasean bargaining inevitable? I wouldn’t bet the farm on it.

Finally, we have Thomas Kinnaman offering the classic economist’s take down of two benefit-cost analyses of shale gas production (i.e., fracking):

The costs of natural gas extraction include, paradoxically, all of the items listed as “benefits” in the two reports discussed above. Natural gas extraction requires labor, capital equipment, pipelines, and raw materials. These economic resources, in a fully employed economy, could have been allocated to other uses. The price paid to secure these resources from these other industries indicates the value of these resources to these other industries (had their value been higher, the market price would have been higher). Thus, the quantity of each economic resource times its market price – in fact 13 the total expenses by the industry as gathered in the surveys – represent the cost of utilizing scarce economic resources to gas extraction.

This block quote is a battle we economists will probably never win.  When I tell my students “jobs” are a cost not a benefit, they look at me as if I suddenly began speaking Swahili.   The paper is from Ecological Economics, and an ungated version is available here.

Water Policy for People

In this TEDx talk ,  economist and aguanomics blogster David Zetland contrasts key differences between “push” systems in which water policies control people’s use of water with “pull” systems that are decentralized and encourage water trades to both improve efficiency and equity.  The technology of the talk isn’t terrific, but the ideas are worthy of attention.

Interview with Ronald Coase

Nobel Laureate Ronald Coase is foundational in both of my courses this term.  His 1937 paper, “The Nature of the Firm,” addressed the canonical question for organizational economics, and a mere 23 years later in 1960 he altered the trajectory of social science research with “The Problem of Social Cost.”  As Coase puts it:

Transaction costs were used in one case to show that if they were not included in the analysis, the firm has no purpose, while in the other I showed, as I thought, that if transaction costs were not introduced into the analysis, for the range of problems considered, the law had no purpose (p. 62).

Now he’s back pounding the pavement in support of his new book, How China Went Capitalist.  We spoke of his op-ed in the WSJ, and now here is an interview with him on NPR.

The interview is mostly a review of his career, including the famous lighthouse debate.

The BP Spill Revisited

You may recall the Deepwater Horizon spill, that sent some five million barrels of oil into the Gulf of Mexico between April and July of 2010.  At the time, we posted about it extensively, and linked up an  Econbrowser post that estimated that within two weeks the stock market had already dinged BP to the tune of $20 billion:

The adjusted closing price of BP on May 4, 2010 was $51.20 whereas had the oil spill not happened I’ve estimated the price would have been $58.11. This amounts to a net loss of $6.91 per share. BP has 3.13 billion shares outstanding amounting to a net loss in $21.62 billion.

That estimate turned out to be almost exactly what BP seems to have committed to its oil spill trust fund:

BP, in agreement with the US government, set up a $20-billion trust to provide confidence that funds would be available. The trust fund was established to satisfy claims adjudicated by the Gulf Coast Claims Facility (GCCF), final judgments in litigation and litigation settlements, state and local response costs and claims, and natural resource damages and related costs.

In 2011, BP contributed a total of $10.1 billion to the fund, including our second year commitment of $5 billion to the trust and the cash settlements received from MOEX USA Corporation (MOEX), Weatherford US., LP (Weatherford), and Anadarko Petroleum Company (Anadarko). This brings the total amount contributed to the trust to $15.1 billion. The remaining committed contributions totalling $4.9 billion are scheduled to be made in 2012 which includes the $250 million settlement with Cameron. The trust disbursed $3.7 billion in 2011 and the total paid out since its establishment amounted to $6.7 billion by the end of 2011.

However, the stock price did not stop at $50, but continued a free fall down to about $35, a price so low that there was speculation that BP stock was undervalued and ripe for takeover. Continue reading The BP Spill Revisited

A New Fracking Rule

Just in time for Earth Day, the Environmental Protection Agency (EPA)  issued a final rule on hydraulic fracturing (a.k.a. “fracking”) this past week.  Remarkably, it looks like the rule passes a benefit-cost assessment without even quantifying any benefits.  Why is that?

On the one hand, it isn’t clear what the benefits are.

While we expect that these avoided emissions will result in improvements in air quality and reductions in health effects associated with HAP, ozone and particulate matter (PM), as well as climate effects associated with methane,we have determined that quantification of those benefits and co-benefits cannot be accomplished for this rule in a defensible way. This is not to imply that there are no benefits or co-benefits of the rules; rather, it is a reflection of the difficulties in modeling the direct and indirect impacts of the reductions in emissions for this industrial sector with the data currently available.

The more remarkable result is that the costs are negative.  That is, the agency projects the industry will save millions of dollars by complying with the regulations. And, why is that?

The engineering compliance costs are annualized using a 7-percent discount rate. The negative cost for the final NSPS reflects the inclusion of revenues from additional natural gas and hydrocarbon condensate recovery that are estimated as a result of the NSPS. Possible explanations for why there appear to be negative cost control technologies are discussed in the engineering costs analysis section in the Regulatory Impact Analysis (RIA).

Notice they are discounted at a (real) 7 percent rate.

Here’s the table: Continue reading A New Fracking Rule

Less than Peak Perfomance

Following an earlier post on Daniel Yergin’s piece in the Wall Street Journal (promoting his new book), I came across James Hamilton‘s response to Yergin’s basic argument.  I use Hamilton as a primary source for teaching the resources piece of my Environmental Economics class, and he is an important player in the public debate.

Next up, we have a Michael Gilberson post that provides an overview of the issues and going through Hamilton’s critique of Yergin.  I find his response particularly useful because he gets at why peak oil might be an issue worth worrying about, and also has a section devoted to “supply and demand: boring and relevant.”  He prefaces his supply and demand discussion with this:

Hamilton draws attention to the slow rate of the supply response relative to demand growth. He is right, this is where the action is with respect to understanding recent oil market developments … and nothing about what he said depends upon whether the peak in world oil production did happen in 2005 or 2007, or will happen in 2011, or won’t happen until 2100 … and framing remarks as about peak oil distracts attention from the real issues.

Indeed.  For those of you who attended the LSB session on petroleum last year certainly know that people with money in the energy industry pay very close attention to supply and demand fundamentals.

The True Costs of Electricity

In Econ 100 this week we talked about external costs (and benefits) and the equivalence of carrots (prices) and quantities (sticks) in terms of the possible “optimal” equilibrium outcomes.  The elephant in the room in these types of discussions is the measurement of the so-called external costs.  As if on cue,  environmental economics superstar and sometime Presidential advisor Michael Greenstone and his co-author Michael Looney have upped a paper with their estimates of these costs associated with electricity and energy.

Here’s their money chart.

The glaring purple associated with coal shows that the principal external costs are not from greenhouse gases, but from conventional criteria pollutants (e.g., NOx, PM). The external costs of coal, even new “clean coal,” are estimated to be higher than the actual operating costs.  Yikes.

It’s worth noting that both solar and wind have non-trivial carbon footprints, because the variability of supply requires ample natural gas plants to cover supply on days when the wind doesn’t blow and the sun doesn’t shine.  Certainly, developing battery storage technologies may well turn out to be the biggest environmental challenge of this next half century.

The results are probably worth quoting at length (after the break):    Continue reading The True Costs of Electricity

Born in the Corn

Our Econ 280 class just got through a spirited debate on ethanol policy (tough luck to the guy that drew “pro-ethanol”), that featured this piece from Hahn and Cecot.  Certainly, the class seemed sympathetic to this change of heart from super-environmentalist, Al Gore:

“It is not a good policy to have these massive subsidies for first-generation ethanol,” Gore said at a green energy conference in Athens, Greece, according to Reuters. First generation refers to the most basic, energy-intensive process of converting corn to ethanol for use as a motor vehicle fuel additive.

On reflection, Gore said the energy conversion ratios — how much energy is produced in the process — “are at best very small.” “One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee,” he said, “and I had a certain fondness for the farmers in the state of Iowa because I was about to run for president.”

Yikes.

If Hahn and Cecot’s benefit-cost analysis didn’t convince you, perhaps this bit of visual evidence will be persuasive (c/o Knowledge Problem).  The first map is the votes on an amendment to an appropriations bill proposal to prevent EPA from encouraging sale of gasoline with higher ethanol content.  The red represents votes opposing the amendment (pro-ethanol) and the blue represents the votes for the amendment.

The Knowledge Problem piece also points us to where the ethanol production comes from.   My “ocular” regression seems to indicate a rather robust relationship between the production and the votes.

Nice!

For more political geography, check out this post on climate legislation.

And if you think the politics is predictable, try out the economics.  What happens when the demand for corn ethanol increases?  One would suspect the price of corn increases, leading to more corn and a reduction in the supply of, say, soybeans.

The Price of Life

In this, the 500th post on the Lawrence Economics Blog, we bring you a story from the NYT on the statistical value of life.  Indeed, as anyone in an environmental economics or policy course knows, the “value” placed on saving a statistical life (VSL) is associated with reductions in risk levels that decrease the probability of being killed (i.e., from reducing the number of purple balls in your urn).

This VSL is pivotal in determining the benefits of many non-economic regulations, and many federal agencies have increased the value used in benefit assessment in the past few years.

The Environmental Protection Agency set the value of a life at $9.1 million last year in proposing tighter restrictions on air pollution. The agency used numbers as low as $6.8 million during the George W. Bush administration.

The Food and Drug Administration declared that life was worth $7.9 million last year, up from $5 million in 2008, in proposing warning labels on cigarette packages featuring images of cancer victims.

The Transportation Department has used values of around $6 million to justify recent decisions to impose regulations that the Bush administration had rejected as too expensive, like requiring stronger roofs on cars.

That is the salient point of the article; the rest mostly gets down to talking about the prospects and problems of using VSLs in the first place.  If you are reading this, you probably know already.

The New New Regulatory State

Earlier this week, President Obama penned an op-ed in the Wall Street Journal about his Administration’s plans for the regulatory state.  The executive branch, as its title suggests, is in charge of executing and administering the laws of the land, and the President expresses his desire to balance the free-market innovation machine while protecting public health and safety:

[C]reating a 21st-century regulatory system is about more than which rules to add and which rules to subtract. As the executive order I am signing makes clear, we are seeking more affordable, less intrusive means to achieve the same ends—giving careful consideration to benefits and costs. This means writing rules with more input from experts, businesses and ordinary citizens. It means using disclosure as a tool to inform consumers of their choices, rather than restricting those choices. And it means making sure the government does more of its work online, just like companies are doing.

As my students learn in 240, 280, and 271, the executive branch, through the Office of Management and Budget, (potentially) plays a central role in shaping regulations as they make their way through the rulemaking process.  Indeed, President Reagan issued the seminal executive order concerning benefit-cost analysis, and each President since has attempted to put his stamp on the process.

Of course, there is often a disconnect between what politicians say and what regulators actually do, here are a couple of other takes from a pair of scholars who spend more than their fair share of time thinking about administrative regulation: Stuart Shapiro and Lynne Kiesling.

Happy Birthday Professor Coase

The intellectual founder of transaction cost economics, Ronald Coase, turns 100 today.  Coase is best known for two papers: “The Nature of the Firm” in 1937 and “The Problem of Social Cost” in 1960.  Both are about the importance of transaction costs.  The former shows that without transaction costs the firm doesn’t matter, and this serves as the starting point for Econ 450.  As The Economist‘s Schumpeter blog points out:

Today most people live in a market economy, and central planning is remembered as the greatest economic disaster of the 20th century. Yet most people also spend their working lives in centrally planned bureaucracies called firms.

Certainly, this has had a profound impact on organizational theory and industrial organization.

The latter paper shows that without transaction costs the law doesn’t matter, the foundation of the so-called Coase Theorem. , and this idea figures prominently in Econ 280. Indeed, the latter is one of the most heavily cited papers in all of social sciences, and is the centerpiece of the law & economics movement.

Coase also wrote the very provocative“The Market for Goods and the Market for Ideas,” arguing that the case for product regulation is no stronger than the case for regulating ideas — a good discussion starter to say the least.

For a pretty good portrait of Coasian ideas, check out his interview with Reason Magazine from back in the day.

Global Climate Change, Political Climate Don’t

As I sift through material for my environmental economics course (Econ 280) this winter, I have found some very interesting material on the political economy of climate change.  Ryan Liazza in the New Yorker walks through the process by which an idea becomes a bill becomes a law — or, in this case, doesn’t become a law.  It is difficult to understand environmental economics and policy without knowledge of these tortured dealings, the underlying institutional rules, and that pesky electorate.

Over at the Economix blog, David Leonhardt has been doing yeoman’s work, provides another perspective on the political economics of climate change legislation,  looks at what EPA could reasonably do to curb CO2 emission without such enabling legislation, and has a couple of pieces (one here, one here) on so-called clean energy.

I will also use this paper on “carbon geography” to illustrate how economists go about these political economics questions.  I don’t think we as economists ever expected serious climate legislation, certainly nothing approaching the types of reductions needed to stabilize atmospheric concentrations.

Climate Change Updates

As far as I know, the climate is still changing, so nothing to update there.  According to economists Matthew Kahn and Matthew Kotchen, however, we don’t seem to care as much about it (if “googling” is a good proxy for “caring”, that is).  Ed Glaeser discusses this and some more of Kahn’s research in today’s NYT Economix blog post.  One of the provocative points is the claim that climate change is a done deal, and that the big coming challenge is to adapt.

One person swimming against the apathy tide is the self-proclaimed skeptical environmentalist, Bjørn Lomborg.  For years, Lomborg has been publishing pieces questioning the scale and scope of environmental problems.  He has now reversed course and is calling for massive investments to tackle the problem.  From my quick read, the tackling seems to be on the emissions side, as opposed to adaptation.

Anyone who has sat through my carbon capture and sequestration talk certainly knows I’m with the adaptation folks on this one.  I simply am not convinced that the world can cut emissions enough to stabilize atmospheric concentrations, even under the most wildly-optimistic scenarios.

For a bit more meat on the climate change discussion, check out a recent symposium in the Journal of Economic Perspectives.  Here’s a table of estimated net benefits across 13 studies.

Notice the overall impacts in terms of GDP per year seem to be on the order of -1% per year, though the estimate from the review author’s article (Richard Tol) shows net gains.  You might also take note as to which countries are likely to win and lose in these estimates, and take that into account next time countries sit down to hammer out an agreement.

Should be an interesting century.

Bad Day for Environmental Economics, And the Environment

Almost unnoticed, this week marks a terrible week for advocates of market solutions to environmental problems, including various cap-and-trade systems. The Wall Street Journal reports that new federal air pollution rules have resulted in the tanking of the sulfur dioxide market, rendering extant permits worthless.

Often referred to as “the grand policy experiment,” (also here), the SO2 market was considered a success, and thought of as a model for potential global system to reduce greenhouse gases.  As with so many cases in economics, a credible commitment matters.  The Journal sums it up nicely:

The market’s collapse shows how vulnerable market-based approaches to reducing air pollution are to government actions. That could scare off investors, who won’t commit to a market where the rules can change at any minute.

Indeed.

One of the great benefits of using market instruments to address environmental problems is that they can substantial lower the costs.  The law of demand says that as price goes up, people buy less.  As a result of the collapses of this market, we will likely pay more to get less in terms of environmental quality.  This may well undermine efforts to implement market solutions elsewhere.  If investors are convinced the regulatory environment is unstable or uncertain, they are unlikely to make large capital investments, and are more likely to take stopgap measures.

An Extended Post on the Benefits and Costs of Oil and Gas Drilling

If there is any upside to the epic oil spill down in the Gulf (and heading this way), it is that it provided a learning opportunity for my courses in Political Economy of Regulation (Econ 240) and Environmental Economics (Econ 280).  I’ll start with the benefit-cost analysis (I actually started this yesterday and have touched on it here and here), and I will try to get to the regulations next week.

The Environmental Economics class looked at the benefit-cost analysis of offshore drilling described in the Draft Proposed Outer Continental Shelf (OCS) Oil and Gas Leasing Program 2010–2015. The document covered areas in Alaska, California, and the Gulf. The students looked at the benefits and costs of expanding offshore production, including the quantification of the environmental (external) costs.

The results deviated little from the extant program from 2007-2012 (see table), where the quantified benefits were far higher than production and external costs. Most of the benefits manifest themselves in the difference between oil and gas prices and the production costs (net economic value in the table). The producers take a chunk of profit and the federal government takes a 12.5% gross production royalty that it redistributes to the states.

OCS BCA

The net benefits calculation is the consumer surplus and producer profits less the environmental costs. As can be seen in the table, the values are dominated by producer profits (roughly equivalent to “net economic value”). The analysis assumes $46/b oil prices, $7 / McF natural gas prices, and a 7% real discount rate.

Continue reading An Extended Post on the Benefits and Costs of Oil and Gas Drilling

Q: How do we regulate in the face of rapid, complex technological innovation?

Use back of page to answer if necessary.

The question for today is what do the recent spill and the financial crash have in common? Kenneth Rogoff has an opinion piece about the difficulty of regulation amid rapid technological advance.

The parallels between the oil spill and the recent financial crisis are all too painful: the promise of innovation, unfathomable complexity, and lack of transparency…  Wealthy and politically powerful lobbies put enormous pressure on even the most robust governance structures.

And it doesn’t stop there at all.

The basic problem of complexity, technology, and regulation extends to many other areas of modern life. Nanotechnology and innovation in developing artificial organisms offer a huge potential boon to mankind, promising development of new materials, medicines, and treatment techniques. Yet, with all of these exciting technologies, it is extremely difficult to strike a balance between managing “tail risk” – a very small risk of a very large disaster – and supporting innovation.

So in a world of rapid technological advance, what is the role in public policy in capturing the benefits while also mitigating the risks? Is “the market” best left to its own devices? Certainly, we have addressed this question in other forms.

I don’t have any answers, and you aren’t likely to find any either. But the point of a lot of what we do on Briggs 2nd is to try to frame and analyze problems, understand what the issues are, the potential winners and losers, and have a discussion about how to proceed.  I hope this helps.

Rogoff’s column is here.

He is also the author of This Time Is Different: Eight Centuries of Financial Folly. You can find a paper version here and the book here.

Take Stock in BP?

Here’s a provocative thought:

BP_wilts_smBP’s stock, which traded at a 52-week high of $62.38 on Jan. 19, 2010, closed on June 1 at $36.52 a share, down 15% on the day. The post-spill sell-off has wiped out some $68 billion of BP’s market value, knocking it down to $114 billion. With the stock now in the cellar, some speculation even has it that BP may attract a buyer.

There are a couple of things going on here.

First, the stock price reflects the value that “the market” places on a company.  One technique for evaluating the effect of some major event on a company’s value is to do an “event study.”  The idea is to try to use other factors (e.g., larger market trends, stock prices of other firms in the industry) to get at how important the event was. A spill like this could damage a company’s reputation, expose it to liability payouts, or make it susceptible to heavy fines.

Ben Fissel at Econbrowser put one of these together shortly after the spill.

When an event, such as this oil spill, impacts a company it will also impact its long run profitability. The divergence of the stock price from what we would have expected had the event never happened is a measure of the net present value of the cost incurred by the oil spill.

He finds big impacts.  The red line in the picture is his estimate of the time series of BP’s stock price without the spill, and the black line is the actual price.  Seems like a big effect.

At the time he did the study, the stock price had been between $50 and $60 for the previous three months.  As the AOL article shows, the price is now down closer to $35. Overall, the market’s valuation of BP has gone from more than $180 billion to about $114 billion.  Does that seem reasonable?

That is, in fact, the second point, that doesn’t seem all that reasonable, which is why BP’s stock is now so low that it might be attracting a buyer.  In other words, at current prices smart money might find BP stock such a bargain that it will swoop in and buy the company, liability exposure be damned. Does that seem reasonable?

I completely buy this logic.  Given that BP is the world’s largest oil producer, it is hard to believe that the long-term profitability of the company has really fallen 40% due to the oil spill. The linked article provides some reasons why a merger might be implausible, but on the fundamentals, this may well be an overreaction.

Further food for thought, what will happen to oil prices if there are significant steps taken to reduce offshore drilling and who stands to win and lose from those price changes?

No Holiday Econ TeaBA

Grill, Baby, Grill

We kick off the final week of classes with a holiday, perhaps an apt metaphor for where many of you have been mentally for the past week.  The holiday preempts the usual slot for the Economics TeaBA, paving the way an afternoon barbecue for the missus and me.

We get back to serious business in my courses Wednesday. In environmental economics (Econ 280), small groups will be reviewing the cost-benefit analysis of the Minerals and Management Services offshore leasing program. Then in the afternoon, the political economy of regulation course  (Econ 240) will be going through some of the administrative regulations governing offshore drilling, truly a look at how the sausage is made.  If you are interested, stop on in to see whether they’ve learned anything.

So, I’m headed over to the parade.  Hope to see you there.