These three article illustrate an aspect of market failure that has led to the development of executive agencies designed to counter them.
The failure is a negative externality:
the imposition of a cost on a party as an indirect effect of the actions of another party. Negative externalities arise when one party, such as a business, makes another party worse off, yet does not bear the costs from doing so. Externalities, which can be either positive or negative to the affected parties, are a form of market failure resulting in inefficient market outcomes. Negative externalities are an important concept in environmental economics, in which pollution represents a tremendous cost borne by outside parties.
The oil and gas industry creates many such failures. Zombie wells are an example:
A zombie well is a well that is coming unplugged. Each oil and gas well is supposed to get plugged at the end of its useful life. And so a zombie well is a well whose plug is failing. . . . a well that could allow fluids underground to travel to the surface, as we saw in some cases in West Texas. Any unplugged well or a well whose plug is failing can allow the fluids underground to get to the surface.
The political strength of the oil and gas industry prevents the state from requiring them to clean these up. Since no one else seems willing to step up, we have an obvious problem.
Here are the parts of the Chronicle's series:
- Zombie Wells, Part 1: Texas oil wells are leaking toxic waste, and no one wants to pay to clean it.
- Zombie Wells, Part 2: How forsaken oil wells are causing environmental chaos across Texas.
- Zombie Wells, Part 3: Sinkholes near old Texas oil wells may signal issues in climate change fight.
- 5 disturbing takeaways from the Chronicle's investigation into Texas zombie wells.
