Wednesday, November 30, 2022

Earthquake in Top Texas Oil Region Spurs Calls for New Fracking Rule

Powerful temblor is latest to hit Permian basin, where scientists link wastewater injection to more seismic activity

By BenoƮt Morenne and Collin Eaton of The WSJ. Excerpts:

"A powerful earthquake in West Texas is drawing fresh scrutiny to frackers’ water-management operations in the nation’s hottest petroleum-producing region.

A 5.4-magnitude earthquake, the fourth largest in Texas history, struck an oil-and-gas production hot spot in Reeves County on Wednesday"

"The temblor adds pressure to the state’s oil-and-gas regulators to impose stricter rules on frackers pumping wastewater underground to stymie the Permian basin’s dangerous new seismic activity, analysts and executives said. It could also prompt a review of management practices and affect oil operations, they said. 

The quake was one of thousands to shake the oil-rich Permian basin of West Texas and New Mexico in recent years. Scientists have linked the increase in seismic activity to shale companies pumping billions of gallons of wastewater—a byproduct of oil-and-gas production—down shallow and deep disposal wells. Injections modify the pressure underground and can cause faults to slip and create earthquakes."

"There have been 14 earthquakes larger than magnitude 4 in the Delaware basin, a section of the Permian, so far this year, compared with 11 in 2021 and three in 2020"

"The temblors have generally caused little damage because they largely occur in uninhabited land. The impact of the recent quake, however, reverberated in Carlsbad, N.M. In San Antonio, University Health hospital evacuated a 105-year-old historic building after employees inside felt some swaying on Wednesday, a University Health spokeswoman said.

In 2021, the Railroad Commission created the Northern Culberson-Reeves Seismic Response Area to address seismicity in the region, which led to operators agreeing to restrictions on wastewater disposal as part of a response plan published in March. If an earthquake of at least 4.5 magnitude strikes that region next year—when some of the rules go into effect—it will trigger a regulatory response prompting companies to curtail usage of shallow water wells by 50% within about 4.5 kilometers, or 2.8 miles, of the seismic event for 18 months."

"Amanda Brock, the chief executive of Aris Water Solutions Inc., said that the industry has been working on the issue of seismicity with regulators and was on a path to improving its water-management practices. “I don’t think this is a tipping point,” she said of this week’s earthquake."

"Stringent rules on water disposal in other U.S. regions have had a measurable impact on seismic activity. Regulators in Oklahoma began implementing rule changes following several 5.0-magnitude earthquakes in 2016, which helped ease the number and strength of temblors in the state, data showed."

Related links:

Study links Texas earthquakes back to 1925 to oil and gas activities.

Seven million people live in regions with higher risk of human-caused earthquakes.

Oklahoma Puts Limits on Oil and Gas Wells to Fight Quakes.

Oklahoma Quakes Decline Amid Curbs on Energy Industry’s Disposal Wells: Drop attributed to restrictions on oil and gas companies’ pumping of wastewater from underground operations.

Monday, November 28, 2022

Apple, Fortnite Battle Moves Before Appeals Court Over App Store Monopoly Claims

Three judges are hearing the high-profile case that now includes the Justice Department and could determine the fate of the iPhone’s power

By Tim Higgins and Aaron Tilley of The WSJ. Excerpts:

"A two-year legal battle between Apple Inc. AAPL -2.63%decrease; red down pointing triangle and “Fortnite” maker Epic Games Inc. over how apps are distributed on the iPhone took its next steps before the Ninth U.S. Circuit Court of Appeals on Monday.

The two sides have engaged in a very public and acrimonious fight with billions of dollars at stake on each side. At the heart of the dispute is how Apple operates its app store and Epic’s contention that the company collects an unfair cut of revenue generated through the software platform.

A U.S. District Judge last year mostly sided with Apple, rejecting all but one of Epic’s claims and declaring the iPhone maker wasn’t a monopolist in what she described as “the submarket for mobile gaming transactions.”

Back then, the judge rejected Epic’s request to force Apple to let programs be downloaded onto the iPhone outside of the rules and reach of the App Store. The judge did rule that Apple was violating California’s Unfair Competition Law, which is a broader statute than other antitrust laws, by prohibiting app makers from steering customers to use payment methods outside of their apps and Apple’s reach. The judge ordered Apple to stop that, but the orders are on hold while the appeals process plays out."

"On Monday, the higher court heard both sides’ appeals in person. A new wrinkle for Apple since the May 2021 trial is the emergence of the Justice Department in the proceedings."

"In a filing earlier this year, Justice Department lawyers cautioned that the district court’s ruling offered a narrow and incorrect interpretation of the Sherman Act, which prohibits activities that restrain market competition. The department warned the ruling potentially sets a precedent for anticompetitive agreements and practices that fall outside the law’s protection."

Sunday, November 27, 2022

Inflation and Unemployment Both Make You Miserable, but Maybe Not Equally

Tweaking the famous ‘Misery Index’ may help it better fit political events

By Josh Zumbrun of The WSJ. Excerpts:

"So just how miserable are Americans right now? 

For nearly 50 years, the go-to place for an answer has been the Misery Index, invented by the late economist Arthur Okun. The formula is simple: add the unemployment rate (3.7% in October) to the inflation rate as measured by the consumer-price index (7.7% in October), which currently comes to 11.4%.

Since the early 1990s, the Misery Index has only been higher during the 2007-09 recession and its aftermath, and for a couple of months in 2020 during the pandemic when joblessness briefly soared during the early lockdowns."

"Yet despite its simplicity, researchers have found many uses for the Misery Index, from predicting crime to presidential approval ratings. 

In a 2001 paper, Andrew Oswald, a professor at the University of Warwick, and co-authors studied surveys covering nearly 300,000 people living in the U.S. and 12 European countries. In the U.S., the question they studied is: “Taken all together, how would you say things are these days—would you say that you are very happy, pretty happy, or not too happy?”

Note that the question doesn’t ask about the economy at all. Yet, the authors found, happiness falls significantly when inflation rises and unemployment climbs. Importantly, though, the two factors didn’t necessarily carry the same weight, as the Misery Index implies.

A 1-percentage-point increase in the unemployment rate had an equivalent impact on happiness as a 1.97-point increase in the inflation rate."

"A 2014 paper implied the weighting on unemployment should be even higher, estimating one point of unemployment hurt well-being five times as much as a one point increase in inflation."

"In today’s labor force, that amounts to 1.6 million people losing a job. “It’s deeply unsettling to see unemployment rising around them even when they haven’t lost their own job,” he said. 

The traditional Misery Index is higher now than at the time of the 2010 midterms, when unemployment was 9.4% and inflation was 1.2%. Yet Democrats, the party holding the White House on both occasions, suffered far more in 2010, losing 63 seats in the House of Representatives and six in the Senate. Last week, they lost at most eight House seats, a figure that might shrink as the final races are called. They suffered no net loss of Senate seats and may, depending on the outcome of a Dec. 6 runoff in Georgia, gain one.

Using Mr. Oswald’s reformulation, these outcomes make more sense. His index was 20% in 2010 and 15.1% now. That’s still quite high. But by putting extra weight on unemployment, the index helps explain why 2010 was so much worse for Democrats.

Steve H. Hanke, a professor of applied economics at Johns Hopkins University, produces an international version of the Misery Index. To the unemployment rate and inflation rate he adds the prime bank lending rate, which captures the cost of credit in an economy, then he subtracts growth rate of inflation-adjusted per capita gross domestic product. (This is a modified version of a variant proposed by the economist Robert Barro.) In Mr. Hanke’s latest index, for 2021, the U.S. is more miserable than 42 countries, but less miserable than 101."