Wikipedia defines “moral hazard” as “a situation where a party will have a tendency to take risks because the costs that could incur will not be felt by the party taking the risk.”
That’s a perfect description of what the O&G industry is doing with fracking.
They know perfectly well that when things go wrong, as they inevitably do, most of the costs will be borne by others.
It’s not just the cleanup and health costs for the toxic spills, explosions, air pollution, illegal dumping, road damage, contamination of drinking water due to improper construction, or the incomplete processing of waste fluids. Nor the legal burden placed on individual landowners and municipalities who must prove the gas companies are at fault. Nor even the negative impacts from unaffordable housing, increased crime, lowered property values and a host of other costs that are passed on to members of the community.
It’s even more in the long run, after the gas companies have squeezed all the profit out of the land and are ready to leave, after 20 or 30 years. The proposed DEC regulations will require 100-foot cement plugs and other measures the gas companies must pay for. But not if they declare bankruptcy, or assign ownership to a third party without any assets.
You’d think the state would require an escrow fund or an iron-clad performance bond to ensure compliance before well construction begins, or even better, through an industry-financed, state-run fund that will take proper responsibility for the long-term consequences of gas drilling. Think again. These are only some of the many loopholes and enforcement weaknesses you can drive a truck through. And don’t think these companies won’t.
Who will end up paying for all of this? Not them. Us. Morals are for people. Moral hazards are for companies.