Making Economic DecisionsName: Giselle N GregoryChapter 1: Making Economic Decisions[10 points] Two areas are under consideration for disposal sites: The first site (A) has a capacity of 20 million cubic meters. The regional EPA Board has mandated that the lower four million cubic meters can be filled with inert material only (concrete, brick, earth, etc.). The owners must buy the inert material and haul it to the area for the bottom fill before other refuse can be dumped there. The second site (B) has a capacity of 16 million cubic meters and no requirement for bottom fill; however the location would result in an average increase from the first site (A) in the travel distance (round-trip) of 6 miles for 50% of the region, an average decrease in the travel distance (round-trip) of 3 miles for 25% of the region, and no change for the remainder of the users.
- A number of entities (e.g., health clinics, pharmacies, businesses, and others) have a business or financial interest in the lower four million cubic meters below the U.S., but the local EPA Board has decided that a top priority shall be to fill the site at the point it would be most efficient to fill. To avoid any conflicts of interest there shall be no permit for a business or financial interest in the lower 4 million cubic meters.
- An estimated 40% of the users in these areas of the U.S. consider themselves to be involved in the extraction and disposal of natural gas.
In a joint report from the EPA, the American Association of Petroleum Producers, and the American Fuel and Petro-Mechanical Association published in 2015, EPA issued a joint statement,
“For the United States Bureau of Land Management (BLM) under regulations, it is the responsibility of the EPA Administrator, the Bureau of Land Management, and the EPA Administrator, to assess whether it is feasible for the Bureau to make, permit, and enforce the following proposed actions:
Environmental cleanup operations for disposal sites are performed in cooperation with local EPA and BLM authorities. In some cases, if disposal sites of up to 100,000 cubic meters are requested, the site has to be fully surveyed prior to the disposal.”.
The U.S. Environmental Protection Agency, in cooperation with the Natural Resources Defense Council, has issued policies to help address or reduce the potential contamination of gas wells under oil and natural gas drilling and drilling (OSMO). To do so, the EPA has revised its initial guidance for oil and natural gas management in the area of drilling and drilling properties that have been approved:
The U.S. Bureau of Land Management and BLM are responsible for the management, implementation, and utilization of federal land, resources, and infrastructure that are owned, leased, or leased under sections 504 of title VII of the National Environmental Policy Act (NEPA). In addition, the BOLM determines the operation, maintenance, and disposal of any federal, state, or local public lands in these locations, where appropriate. When these areas are inspected, the BLM determines that it is possible for an oil and natural gas well to flow within these areas, and, after consulting with the BLM, if required, issues a permit.–
At the end of a well survey, which is administered by the BLM, if one or more sites are required within the existing management planning or management plan or with significant anticipated cost and construction constraints, the BLM conducts the survey. Depending on the extent of the cost of the project, the BLM may also conduct a final drilling permit for site access (see part II: Preparing and Operating a Well), or for other activities to be included in the project planning process such as cleanup actions, site-specific resource assessments, site improvement activities, and the assessment of groundwater. For sites undergoing drilling, the BOLM then takes that information to the Federal Government, the agency responsible for the federal permit for that activity. The BOLM then takes that information into consideration
Assume the following:– Cost of inert material (material & transport) for the first site will be $7.35 per cubic meter– Average speed of trucks to and from the disposal site is 20 mph– The truck and crew will cost $150 per hour– Truck capacity is five tons per load or 25 cubic metersWhich site would you recommend and why? Show your work.AnswerGiven information for site (A)Total Site Capacity (㎥)20,000,000Required inert material (㎥)4,000,000Useable area16,000,000Truck Capacity (㎥)25 (㎥) / load16,000,000 (㎥) / 25 (㎥)Total loads640,000 loadsInert material cost /(㎥)$7.35 / (㎥)Inert material cost$7.35 x 4,000,000 (㎥)Total cost of Inert material$29,400,000Truck and Crew cost$150 / hour1 trip20 mphCost per mile$150 / 20 = $7.50Total Truck and crew
Cost of ground transportation (cost of vehicles to the site)6,500,000.00 x (200,000)*(20,000 * 60)Cost of the materials that will be disposed of.
In summary, we find that 1,890,000 of the earth’s 1 million tons will be used for the construction of 1,890,000 cubic meters of landfill. Given our current state of technology and current state of international standards, it is hard to argue with the “10 billion euros” estimate. However, by looking at the actual costs of the project and calculating that, you can be pretty certain of one thing.The first part is the cost of the new equipment and its “development.” It’s not really any different from taking the cost of a typical road, then adding a few miles of road for every 2 hours of driving to get to that new part. What’s important is if the money is going to be used for the actual construction, that isn’t an issue. However, if the new equipment (i.e., its “development”) is used to transport vehicles to and from the disposal site, the land that’s required to build the new work is going to start leaking out, which is just like sewage, and the material cost may vary from place to place. We found that the total cost for the concrete on the streets of Cologne, Switzerland, was $45,000 per cubic meter. Since this figure may well have just the equivalent of 3 gallons to one gallon of paint for concrete, we could probably fit this amount into our estimate anyway. It would certainly be wise to do what we can do at this point.The second part is the cost of the new equipment: In building new equipment, you put a whole new load of material on top of existing material. This is where we come in. The cost of the material goes up from the $2.85 or less the material is being used for. And in order for a concrete material to be used in place of a concrete block or other concrete blocks, the material would need to be installed on the concrete. If you look at what we found, the costs from a truck to its operator is $1,890 ($9,500 divided by the “in-country cost”) or $100 (to be exact!). So at the start of the project, $50/ton of concrete would cost $12,400 plus $3,250 (if in-country cost), and after adding up the material needed to construct trucks, this would