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Quad O’s Evolution: Subsequent Regulatory Effects from Existing Regulations on Shareholder Wealth

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  • Scott A. Carson

Abstract

Quad O is the Environmental Protection Agency (EPA)’s methane reduction regulation that requires greater producer efficiency when methane is extracted by requiring efficient upstream, midstream, and downstream equipment. There are various times when Quad O was implemented and updated, and August 11th, 2012 was the first implementation period. Quad O’s second implementation was on January 1st, 2015, and this study evaluates oil and gas returns around Quad O’s early 2015 regulatory change. Oil and gas returns were mostly unaffected by the second Quad O implementation, indicating it is difficult to identify when firm returns responded to regulatory change. Equity to commodity markets interacted for each firm’s return. Exploration & production equity to Brent crude ratios are among the lowest commodity market risk in the industry. In contrast, equity and commodity markets place the next highest equity to commodity ratios to mid and downstream transportation & pipeline and refining & marketing firms, indicating comparative commodity to equity risk was higher closer to oil and gas extraction.

Suggested Citation

  • Scott A. Carson, 2025. "Quad O’s Evolution: Subsequent Regulatory Effects from Existing Regulations on Shareholder Wealth," CESifo Working Paper Series 11821, CESifo.
    • Handle: RePEc:ces:ceswps:_11821
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    References listed on IDEAS

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    1. Sunil K. Mohanty & Mohan Nandha, 2011. "Oil Risk Exposure: The Case of the U.S. Oil and Gas Sector," The Financial Review, Eastern Finance Association, vol. 46(1), pages 165-191, February.
    2. Joskow, Paul L & Schmalensee, Richard, 1998. "The Political Economy of Market-Based Environmental Policy: The U.S. Acid Rain Program," Journal of Law and Economics, University of Chicago Press, vol. 41(1), pages 37-83, April.
    3. Carson, Scott Alan, 2020. "United States oil and gas stock returns with multi-factor pricing models: 2008–2018," The North American Journal of Economics and Finance, Elsevier, vol. 54(C).
    4. Carson, Scott Alan, 2020. "United States oil and gas stock returns with multi-factor pricing models: 2008-2018," Munich Reprints in Economics 84754, University of Munich, Department of Economics.
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    Keywords

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    JEL classification:

    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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