Yale Study Finds Shale Gas Benefits Outweigh Costs 400 to 1

cost vs benefitsOh oh, this isn’t supposed to happen…A group of Yale economics graduates together with a Yale professor have written a detailed and well-researched paper refuting the mighty New York Times and concluding that the benefits of shale gas are enormous and should continue.

The 12-page paper, titled “The Arithmetic of Shale Gas” is embedded below. The authors of the paper consider both the economic benefits and the costs, including environmental damage, and make the following observation:

How then do we extrapolate individual disaster scenarios across an entire industry to determine the social cost of possible contamination from fracking in order to deduct it from the consumer surplus of $100 billion for each year? We consider that the reported instances of contamination from fracking relate, at most, to an extremely limited minority over hundreds of thousands of wells. Assuming the worst—that the accidents occur in one year; that the cleanup requires a new water well at $5,000; and that one hundred spills occur at $2.5 million per spill given then that the industry drills 10,000 new wells per year. The cost of frackwater contamination is $250 million. Economic benefits, as estimated in as limited methodology as is reasonable, exceed costs to the community by 400-to-1.*

Restated: according to the Yale economists, the benefits of drilling outweigh the costs, including environmental costs, by 400 to 1. Sounds about right to MDN.

So MDN wonders, will the anti-drilling PC police be around to besmirch and sully the reputation of Yale and these economists as they’ve tried to do with the Shale Resources and Society Institute at the University at Buffalo (see this MDN story)? The Yale economists would be well-advised to watch their backs. The long knives will surely come out now.

*See page 11 in the paper below.