ABSTRACT
This chapter argues that greater harmony between environmental amenities and oil and gas development is often prevented by government policies that give each side strong incentives to engage in a wasteful battle over the control of public resources. It suggests that policy alternatives that promote cooperation by satisfying the goals of both economic efficiency and environmental integrity. When energy resources are controlled by the political sector, environ-mentalists are pitted against exploration and development companies in a setting that encourages confrontation. If an environmental group successfully curtails oil exploration, then it captures the “profits” associated with the pristine environment but bears none of the opportunity cost of forgone energy production. Recognizing that politics will determine the distribution of profits from energy resources, both sides will invest time and money lobbying government. Legal disputes add to energy costs as federal environmental assessments of proposed exploration and development are challenged in the courts.
