Econonomics of Energy and Environmental Policy

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Heterogeneity of State Shale Gas Regulations

The rapid rise in shale gas production has affected the role and importance of regulatory policy at all levels of government. As the primary regulator in this area, state level regulatory changes are particularly significant. As shale gas production increases, some states are updating their regulations, while others maintain dated rules, put in place prior to hydraulic fracturing that may or may not address environmental issues specific to modern shale gas development or recent concerns about environmental impacts. Our research finds that state regulation is remarkably heterogeneous. Regulatory heterogeneity includes heterogeneity in the stringency of state regulations. Though heterogeneity in state regulation is not inherently good or bad, our limited data suggests that the heterogeneity is neither explained by differences in state conditions, nor does it necessarily reflect indicators of regulatory capture. The paper also compares the use of regulations to use of liability law, voluntary practices, and information provision. In addition, it identifies new activities being regulated and areas where additional regulation may be needed.
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JEL Codes:L51: Economics of Regulation, L95: Gas Utilities; Pipelines; Water Utilities, Q35: Hydrocarbon Resources

Keywords: Shale gas, Regulation, Liability law

DOI: 10.5547/2160-5890.4.1.akru

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Published in Volume 4, Number 1 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.


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