Understanding the Costs and Benefits of Deepwater Oil Drilling Regulation

Resources for the Future Discussion Paper No. 10-62

64 Pages Posted: 27 Jan 2011

See all articles by Alan Krupnick

Alan Krupnick

Resources for the Future

Sarah E. Campbell

Resources for the Future

Mark A. Cohen

Vanderbilt University - Strategy and Business Economics; Vanderbilt University - Law School; Resources for the Future

Ian W. H. Parry

Resources for the Future

Date Written: January 12, 2011

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.

Keywords: Catastrophic Oil Spill, Cost–Benefit Analysis, Government Regulation, Liability

Suggested Citation

Krupnick, Alan and Campbell, Sarah E. and Cohen, Mark A. and Parry, Ian W. H., Understanding the Costs and Benefits of Deepwater Oil Drilling Regulation (January 12, 2011). Resources for the Future Discussion Paper No. 10-62. Available at SSRN: https://ssrn.com/abstract=1744203 or http://dx.doi.org/10.2139/ssrn.1744203

Alan Krupnick (Contact Author)

Resources for the Future ( email )

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Sarah E. Campbell

Resources for the Future ( email )

1616 P Street, NW
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Mark A. Cohen

Vanderbilt University - Strategy and Business Economics ( email )

Nashville, TN 37203
United States
615-322-0533 (Phone)

HOME PAGE: http://https://business.vanderbilt.edu/bio/mark-cohen/

Vanderbilt University - Law School

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Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States
202-328-5000 (Phone)

Ian W. H. Parry

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States
202-328-5151 (Phone)
202-939-3460 (Fax)

HOME PAGE: http://www.rff.org/~parry

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