According to E&E News, Lisa Jackson said Friday that
public pressure, not EPA regulation, will clean up fracking.
Fracking fluids will get greener,
water use will get down, all because the industry, quite frankly,
will do it, must do it, and will feel the public pressure -- not
the EPA pressure -- to do this in a responsible way.
Does she really mean it? Notwithstanding current pronouncements
by the GOP Presidential candidates, neoclassical economics has a
clear role for government regulation. If economic activity
– such as fracking – imposes costs on society
that are not internalized to the company doing the fracking, then
regulation is appropriate. I think that fracking is of net benefit
to society, but it certainly appears to impose at least some
externalities that have not to date been internalized to the
drilling companies. Thus, government regulation seems to be
warranted – and logic tells us that those externalities
will not be accounted for in the absence
