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Understanding the Costs and Benefits of Deepwater Oil Drilling Regulation

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Author Info

  • Krupnick, Alan

    ()
    (Resources for the Future)

  • Campbell, Sarah
  • Cohen, Mark A.

    ()
    (Resources for the Future)

  • Parry, Ian W.H.

    ()
    (Resources for the Future)

Abstract

The purpose of this paper is to provide a conceptual framework for understanding how analysis of costs and benefits might be incorporated into an assessment of regulatory policies affecting deepwater drilling. We begin by providing a framework for analyzing the life-cycle impacts of oil drilling and its alternatives, including onshore drilling and importing oil from abroad. We then provide background estimates of the different sources of oil supplied in the United States, look at how other oil supply sources might respond to regulations on deepwater drilling, and consider the economic costs of these regulations. After providing a comprehensive description of the potential costs and benefits from various types of drilling—including, when possible, estimates of the magnitude of these benefits and costs—we discuss the extent to which these costs and benefits may already be taken into account (or reinforced) through the legal, regulatory, and tax systems and through market mechanisms. We conclude by presenting a framework and simple example of how a cost–benefit analysis might be used to inform regulation of deepwater drilling, and sum up the policy implications of our work.

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Bibliographic Info

Paper provided by Resources For the Future in its series Discussion Papers with number dp-10-62.

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Date of creation: 12 Jan 2011
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Handle: RePEc:rff:dpaper:dp-10-62

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Related research

Keywords: catastrophic oil spill; cost-benefit analysis; government regulation; liability;

This paper has been announced in the following NEP Reports:

References

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  1. Delucchi, Mark & Murphy, James, 2008. "US military expenditures to protect the use of Persian Gulf oil for motor vehicles," Institute of Transportation Studies, Working Paper Series qt0j9561zd, Institute of Transportation Studies, UC Davis.
  2. Muehlenbachs, Lucija & Cohen, Mark A. & Gerarden, Todd, 2011. "Preliminary Empirical Assessment of Offshore Production Platforms in the Gulf of Mexico," Discussion Papers dp-10-66, Resources For the Future.
  3. Cohen, Mark A. & Gottlieb, Madeline & Linn, Joshua & Richardson, Nathan, 2011. "Deepwater Drilling: Law, Policy, and Economics of Firm Organization and Safety," Discussion Papers dp-10-65, Resources For the Future.
  4. Cohen, Mark A., 1986. "The costs and benefits of oil spill prevention and enforcement," Journal of Environmental Economics and Management, Elsevier, vol. 13(2), pages 167-188, June.
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