The practice of fracking by the oil and gas companies produces saltwater as its by-product.The disposal of the saltwater can lead to earthquakes.What did the government of the state of Oklahoma do to reduce the number of earthquakes in the state?

Question

Quizplus · Accepted Answer

The government of the state of Oklahoma put a limit on how much saltwater the oil and gas companies could dispose of to reduce the number of earthquakes. This is a form of regulation that aims to correct the negative externality caused by the disposal of saltwater. Option A is not an effective solution because it doesn't address the root cause of the problem, and it may not deter the companies from fracking. Option B is too extreme, as fracking has economic benefits, such as job creation and increased revenues from oil and gas production. Option D assumes that the market will find the socially optimal outcome by itself, ignoring the negative externalities that occur.

The Practice of Fracking by the Oil and Gas Companies