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Gulf of Mexico Oil Spill - INTRODUCTION Drilling oil is en...

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INTRODUCTION Drilling oil is en example of a public good. A public good is nonexcludable and nonrival in consumption. In most cases a public good must be supplied by the government. The marginal social benefit of a public good is equal to the sum of the individual marginal benefits to each consumer. The efficient quantity of a public good is the quantity at which marginal social benefit equals the marginal cost of providing the good. Like a positive externality, marginal social benefit is greater than any one individual’s marginal benefit, so no individual is willing to provide the efficient quantity. On Tuesday, April 20, 2010 The Deepwater Horizon, a semi-submersible offshore drilling rig in the Gulf of Mexico, exploded and caught fire at around 10 p.m. local time (CST). 126 people were on board, 17 were injured and 11 are still missing (presumed dead). Most of the survivors escaped using lifeboats and were picked up by a supply boat that BP had hired. The survivors were brought to Port Fourchon to go through a medical check-up and be reunited with their families. On Saturday, April 24, it was discovered that the underwater "riser" structure that connects the rig with the well was damaged and oil was leaking into the ocean. At first it was estimated that 1,000 barrels a day were being dumped into the Gulf of Mexico's ecosystems. On Wednesday, April 28, 2010 The U.S. Coast Guard is considering setting fire to the oil to keep some of it from reaching the sensitive ecological areas on the shores. This is a tough decision, as there are pros and cons to each course of action. They set fire to a pocket of the oil, but not on a large scale. On Thursday, April 29, 2010, the oil slick has reached the Mississippi Delta. The slick was estimated, as of April 30, to cover 6,000 square miles, or an area approximately equivalent to that of Jamaica. It was so close to New Orleans that many local residents reported
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that they could smell the oil. As time goes by, the data becomes more accurate on Saturday, May 1st, 2010 . SkyTruth , a small non-profit, analyzed radar and satellite imagery and estimated that the oil was leaking much faster than the original official estimates. The initial figure was 1,000 barrels/day, which they successfully challenged with a new estimate of 5,000 barrels/day. But
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