The Economics of Natural Gas Flaring: An Agenda for Research and Policy

Agerton, Mark; Gilbert, Ben; Upton, Gregory

doi:10.2139/ssrn.3655624

The Economics of Natural Gas Flaring: An Agenda for Research and Policy

USAEE Working Paper No. 20-460

54 Pages Posted: 21 Jul 2020 Last revised: 27 Aug 2020

See all articles by Mark Agerton

Mark Agerton

Department of Agricultural and Resource Economics, UC Davis

Ben Gilbert

Colorado School of Mines - Division of Economics and Business

Gregory Upton

Louisiana State University, Baton Rouge

Date Written: July 19, 2020

Abstract

Flaring of natural gas is one of the most visible signs of pollution in the oil and gas industry and, perhaps paradoxically, one of the least understood. We marshal granular data on the oil and gas value chain to identify the bottlenecks in the value chain that physically cause flaring. We analyze the economic reasons for flaring, market distortions that could exacerbate it, and the cost to society of flaring. We lay out an agenda for researchers and policymakers charged with understanding and regulating flaring.

Keywords: flaring, methane, natural gas, shale, energy policy, environmental policy

JEL Classification: Q35, Q48, Q53, Q54

Suggested Citation: Suggested Citation

Agerton, Mark and Gilbert, Ben and Upton, Gregory, The Economics of Natural Gas Flaring: An Agenda for Research and Policy (July 19, 2020). USAEE Working Paper No. 20-460, Available at SSRN: https://ssrn.com/abstract=3655624 or http://dx.doi.org/10.2139/ssrn.3655624