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Public Policy Towards Offshore Oil Spills


  • Charles F. Mason


On April 20, 2010, the Macondo well suffered a blowout, causing the mobile offshore drilling unit “Deepwater Horizon” to explode and eventually sink. Oil flowed from the well into the Gulf of Mexico for 87 days. In the aftermath of this event, the US Government proposed significant regulatory changes related to offshore oil and gas exploration and production. In this paper I consider the likely costs and potential benefits from these new regulations. While both costs and benefits are very large, plausibly running into billions of US Dollars, a strong case can be made in favor of the regulations.

Suggested Citation

  • Charles F. Mason, 2017. "Public Policy Towards Offshore Oil Spills," CESifo Working Paper Series 6584, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_6584

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    References listed on IDEAS

    1. Polinsky, A. Mitchell & Shavell, Steven, 2014. "Costly litigation and optimal damages," International Review of Law and Economics, Elsevier, vol. 37(C), pages 86-89.
    2. Viscusi, W. Kip & Zeckhauser, Richard J., 2011. "Deterring and Compensating Oil Spill Catastrophes: The Need for Strict and Two-Tier Liability," Working Paper Series rwp11-025, Harvard University, John F. Kennedy School of Government.
    3. Christy Siegel & Steven B. Caudill & Franklin G. Mixon, 2013. "Clear skies, dark waters: The Gulf oil spill and the price of coastal condominiums in Alabama," Economics and Business Letters, Oviedo University Press, vol. 2(2), pages 42-53.
    4. Muehlenbachs, Lucija & Cohen, Mark A. & Gerarden, Todd, 2013. "The impact of water depth on safety and environmental performance in offshore oil and gas production," Energy Policy, Elsevier, vol. 55(C), pages 699-705.
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    More about this item


    public policy; oil spills; catastrophe;

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H00 - Public Economics - - General - - - General
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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