Apr 19,2013

UP Links 19 April 2013

+ Brandon Fuller

Jeffrey Frankel on the Fear of Fracking

First, fracking’s opponents worry that shale gas will displace renewable energy sources such as wind and solar power. But the fact is that CO2 emissions cannot be reduced without cutting coal use, and shale gas is already displacing coal in the US. This is not speculation; it is happening now. Even if some cleaner source becomes viable later, we would still need natural gas as a bridge to get us from here to there.Put differently, if the world continues to build coal-fired power plants at the current rate, those plants will still be around in 2050, regardless of what other technologies become viable in the meantime. Solar power cannot stop those coal-fired plants from being built today. Natural gas can.

Elizabeth Muller on Shale Gas

…some environmentalists are skeptical of [energy secretary nominee] Mr. Moniz. He is known for advocating natural gas and nuclear power as cleaner sources of energy than coal and for his support of hydraulic fracturing to extract natural gas from shale deposits. The environmental group Food and Water Watch has warned that as energy secretary, he “could set renewable energy development back years.”The criticism is misplaced. Instead of fighting hydraulic fracturing, environmental activists should recognize that the technique is vital to the broader effort to contain climate change and should be pushing for stronger standards and controls over the process.

Michael Clemens on the Wage Impacts of Immigration to the U.S.

Let’s take the most pessimistic estimate of Borjas, 3 percent decline. First, that’s an effect on nominal wages. It’s not an effect on real wages because it doesn’t take into account the fact that immigration makes a lot of things less expensive. Patricia Cortes at Boston University has found this in a famous Journal of Political Economy paper. In cities that have gotten more migrants, childcare is cheaper, food service is cheaper, lawn care is cheaper, down the line. The basket of goods that lots of people consume is cheaper, and that offsets any decline in nominal wages, because real wages are determined by what those nominal wages are spent on. That is not accounted for in the Borjas analysis or the Peri analysis.There are other things that those analyses don’t take into account. Much is made of the subgroups in the Borjas analysis. He finds that high school dropouts have a larger wage effect than the 3 percent, which is the effect on average American workers. They go down 8 percent, if I remember that right. There is a problem with that, which is that it’s cumulative over 20 years. There was a generation that decided whether or not to become a high school dropouts in that. There weren’t a set of 18-year-olds who sat around. There were new generations, and each of them was successively deciding to stay or leave.And when high school dropout wages go down, the return to staying in high school goes up.

Pushing Toward an All-Electric Car

Layden is optimistic that technological progress will be faster than many skeptical analysts believe. He remembers being happy to be able to get 10 mpg from an engine he worked on back in 1986, and how impossible it once seemed to make fuel- injection technology affordable. A quarter-century later, when engineers list 100 reasons why inexpensive but powerful batteries cannot be made, it all sounds familiar to him. “Then we go away and put a team together and do it in about half the time you thought it was going to happen and a third of the cost,” he said.