Tuesday, August 12th, 2014 11:21 am

Fracking (revisited)

New technology for fracking natural gas, by lowering energy costs in the United States, will make US industrial firms more cost competitive and thus significantly stimulate the growth of US merchandise exports. (The experts panel previously voted on this question on May 23, 2012. Those earlier results can be found here.)

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel
Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Agree 5
Two caveats. How significant this effect will be is uncertain. It might have negative side effects by discouraging switch to cleaner energy.
Bio/Vote History
         
Alesina Alberto Alesina Harvard Did Not Answer
Bio/Vote History
         
Altonji Joseph Altonji Yale Agree 5
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Uncertain 3
Bio/Vote History
         
Autor David Autor MIT Agree 7
Bio/Vote History
         
Baicker Katherine Baicker Chicago Did Not Answer
Bio/Vote History
         
Banerjee Abhijit Banerjee MIT Disagree 5
The effect on the world price of energy is probably small and would be partly balanced by a rise in the dollar as US imports drop.
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Agree 3
Bio/Vote History
         
Brunnermeier Markus Brunnermeier Princeton Agree 5
Bio/Vote History
         
Chetty Raj Chetty Stanford Uncertain 1
Bio/Vote History
         
Chevalier Judith Chevalier Yale Agree 8
Transportation costs for natural gas are sufficient to imply that the US will face prices below the world price of energy.
Bio/Vote History
         
Currie Janet Currie Princeton Uncertain 5
The part I am uncertain about is whether lower energy costs are likely to have a significant effect on the competitiveness of U.S. exports.
Bio/Vote History
         
Cutler David Cutler Harvard Disagree 7
Bio/Vote History
         
Deaton Angus Deaton Princeton Agree 3
Bio/Vote History
         
Duffie Darrell Duffie Stanford Agree 4
Lower an input cost and produce at a lower total cost. The statement does not consider the environmental costs, which may be significant.
Bio/Vote History
         
Edlin Aaron Edlin Berkeley No Opinion
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Disagree 5
In a global market for energy, US and foreign manufacturing firms will ultimately face the same energy costs.
Bio/Vote History
         
Einav Liran Einav Stanford Uncertain 3
Bio/Vote History
         
Fair Ray Fair Yale Did Not Answer
Bio/Vote History
         
Finkelstein Amy Finkelstein MIT Uncertain 5
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Did Not Answer
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Strongly Agree 9
at least while our extraction technology is better than everyone else's (we're not the only ones with shale reserves)
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Disagree 3
unlikely to be significant & extent depends on export restrictions. Welfare likely maximized with no restrictions. see below reference.
-see background information here
Bio/Vote History
         
Hall Robert Hall Stanford Did Not Answer
Bio/Vote History
         
Hart Oliver Hart Harvard Uncertain 2
I agree that energy cost should fall, which will increase U.S. competitiveness. The effects on growth are more subtle, and harder to predict
Bio/Vote History
         
Holmström Bengt Holmström MIT Agree 6
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Disagree 10
Fuel prices are largely set on a world market so the supply in any one country does not reduce its producers' input costs markedly.
Bio/Vote History
         
Hoynes Hilary Hoynes Berkeley Uncertain 5
Bio/Vote History
         
Judd Kenneth Judd Stanford Agree 4
Bio/Vote History
         
Kaplan Steven Kaplan Chicago Strongly Agree 8
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Agree 3
I have learned that this energy source will mainly produce local gains & US manufacturers probably will benefit. Magnitudes still uncertain
Bio/Vote History
         
Klenow Pete Klenow Stanford Agree 5 Bio/Vote History
         
Levin Jonathan Levin Stanford Agree 4
Definitely agree on direction, less confident about magnitudes.
Bio/Vote History
         
Maskin Eric Maskin Harvard Agree 7
Bio/Vote History
         
Nordhaus William Nordhaus Yale Disagree 6
Clearly will make more competitive in some sectors, but unlikely to make major impact on aggregate.
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Uncertain 3
Bio/Vote History
         
Samuelson Larry Samuelson Yale Agree 6
Absent frictions, prices would fall world wide. We can expect US firms to gain from some frictions, though the magnitude is hard to assess.
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Agree 5
Not sure about "significantly". Cost advantage will diminish as LNG transportation infrastructure develops and export restrictions drop.
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Strongly Agree 8
Natural gas prices are NOT determined in a world market. Prices in the US will be cheaper than those in most nations for a long time.
Bio/Vote History
         
Shapiro Carl Shapiro Berkeley Agree 7
Bio/Vote History
         
Shimer Robert Shimer Chicago Strongly Disagree 8
Fracking will reduce energy imports and hence reduce net exports of other goods. This doesn't mean that fracking is a bad idea!
Bio/Vote History
         
Stokey Nancy Stokey Chicago Did Not Answer
Bio/Vote History
         
Thaler Richard Thaler Chicago Uncertain 1
Isn't oil a global commodity?
Bio/Vote History
         
Udry Christopher Udry Yale Strongly Disagree 7
At best a short-run and insignificant effect; prices are set in a global market.
Bio/Vote History
         

10 New Economic Experts join the IGM Panel


For the past two years, our expert panelists have been informing the public about the extent to which economists agree or disagree on important public policy issues. This week, we are delighted to announce that we are expanding the IGM Economic Experts Panel to add ten new distinguished economists. Like our other experts, these new panelists have impeccable qualifications to speak on public policy matters, and their names will be familiar to other economists and the media.

To give the public a broad sense of their views on policy issues, each new expert has responded to a selection of 16 statements that our panel had previously addressed. We chose these 16 statements, which cover a wide range of important policy areas, because the original panelists' responses to them were analyzed in a paper comparing the views of our economic experts with those of the American public. You can find that paper, by Paola Sapienza and Luigi Zingales, here. The paper, along with other analyses of the experts' views, was discussed during the American Economic Association annual meetings, and the video can be found here.

The new panelists' responses to these statements can be seen on their individual voting history pages. Our ten new economic experts are:

Abhijit Banerjee (MIT)
Markus K. Brunnermeier (Princeton)
Liran Einav (Stanford)
Amy Finkelstein (MIT)
Oliver Hart (Harvard)
Hilary Hoynes (Berkeley)
Steven N. Kaplan (Chicago)
Larry Samuelson (Yale)
Carl Shapiro (Berkeley)
Robert Shimer (Chicago)


Please note that, for the 16 previous topics on which these new panelists have voted, we left the charts showing the distribution of responses unchanged. Those charts reflect the responses that our original panelists gave at the time, and we have not altered them to reflect the views of the new experts.

We have also taken this opportunity to ask our original panelists whether they would vote differently on any of the statements we have asked about in the past. Several experts chose to highlight statements to which they would currently respond differently. In such cases, you will see this "revote" below the panelist's original vote. We think you will enjoy seeing examples of statements on which some experts have reconsidered.

As with the 16 previous statements voted on by new panelists, these "revote" responses are not reflected in the chart that we display showing the distribution of views for that topic: all the charts for previous questions reflect the distribution of views that the experts expressed when the statement was originally posed.

About the IGM Economic Experts Panel

This panel explores the extent to which economists agree or disagree on major public policy issues. To assess such beliefs we assembled this panel of expert economists. Statistics teaches that a sample of (say) 40 opinions will be adequate to reflect a broader population if the sample is representative of that population.

To that end, our panel was chosen to include distinguished experts with a keen interest in public policy from the major areas of economics, to be geographically diverse, and to include Democrats, Republicans and Independents as well as older and younger scholars. The panel members are all senior faculty at the most elite research universities in the United States. The panel includes Nobel Laureates, John Bates Clark Medalists, fellows of the Econometric society, past Presidents of both the American Economics Association and American Finance Association, past Democratic and Republican members of the President's Council of Economics, and past and current editors of the leading journals in the profession. This selection process has the advantage of not only providing a set of panelists whose names will be familiar to other economists and the media, but also delivers a group with impeccable qualifications to speak on public policy matters.

Finally, it is important to explain one aspect of our voting process. In some instances a panelist may neither agree nor disagree with a statement, and there can be two very different reasons for this. One case occurs when an economist is an expert on a topic and yet sees the evidence on the exact claim at hand as ambiguous. In such cases our panelists vote "uncertain". A second case relates to statements on topics so far removed from the economist's expertise that he or she feels unqualified to vote. In this case, our panelists vote "no opinion".

The Economic Experts Panel questions are emailed individually to the members of the panel, and each responds electronically at his or her convenience. Panelists may consult whatever resources they like before answering.

Members of the public are free to suggest questions (see link below), and the panelists suggest many themselves. Members of the IGM faculty are responsible for deciding the final version of each week’s question. We usually send a draft of the question to the panel in advance, and invite them to point out problems with the wording if they see any. In response, we typically receive a handful of suggested clarifications from individual experts. This process helps us to spot inconsistencies, and to reduce vagueness or problems of interpretation.

The panel data are copyrighted by the Initiative on Global Markets and are being analyzed for an article to appear in a leading peer-reviewed journal.

chicago booth