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MARATHON OIL: When Wasting Resources is Better for the Bottom Line

Monday, Oct. 21, 2013

1,500 fires are burning bright in North Dakota. The culprit? The intentional burning of natural gas. In a process called “flaring,” oil companies burn the natural gas that rises up in the process of drilling for oil. Relative to oil, natural gas is a cheap commodity, resulting in the oil companies not having an economic incentive to build the necessary pipelines to make use of the natural gas. While the process inflicts less environmental harm than simply releasing the gas, flaring produces climate-warming carbon dioxide into the atmosphere. The practice is expanding rapidly, and today, the value of flared gas in North Dakota has reached approximately $100 million a month. Do businesses have an ethical obligation to make use of all available resources, even if it hurts their bottom line?

  Patrick: Corporate social responsibility is a hot topic, but is still coming to terms with implementation concerns in light of corporate fiduciary duties. Under our current system, expecting corporations to intentionally take losses is equivalent to stretching them in opposite directions. For now, the solution is to artificially create the economic incentive for sustainable business practices; whether that be landowners taking a hard line on making use of natural gas when negotiating, or government subsidies for the pipelines necessary to transport the natural gas. Of course sustainable business is the desired endpoint: it’s just a question of how we get there.

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