Environmental Regulations Burden Domestic Petroleum Industry

Strategic Insights -

A lively debate unfolded during a Senate Environment and Public Works Committee hearing on Wednesday, with senators, including James Inhofe of Oklahoma, questioning the impact of environmental regulations on the domestic petroleum industry. Environmental Protection Agency (EPA) Administrator Carol M. Browner testified that a proposed comprehensive cost-benefit law may hinder companies attempting to reduce environmental damage. The Department of Transportation officials offered to work with the petroleum industry on enforcing costly safety measures. Senate Majority Leader Robert Dole's (R-Kan.) comprehensive regulatory reform bill is facing opposition from some senators who believe it will hamper voluntary efforts by refiners to cut sulfur dioxide emissions.

Key Takeaways:

  • The petroleum industry spent more on environmental regulations in 1992 than on searching for oil and gas, with expenditures totaling $10.5 billion or $4 per barrel.
  • The cost of phase two of the reformulated gasoline program is expected to reach $37 billion by 2000, exceeding the combined value of all U.S. refineries ($31 billion).
  • EPA estimates suggest that complying with the toxicity characteristic rule regulating toxic wastes would cost between $190 million and $270 million to save four lives every 100 years.
  • A statute-by-statute review is needed, according to EPA Administrator Carol M. Browner, rather than a one-size-fits-all approach to regulatory reform.
  • The comprehensive regulatory reform bill introduced by Senate Majority Leader Robert Dole (R-Kan.) may hinder voluntary efforts by refiners to cut sulfur dioxide emissions.
  • The Department of Transportation is working with the oil and gas industry on pipeline safety initiatives announced this week.
  • President Clinton has stated that he would oppose any regulatory reform bills resulting in more litigation, paperwork, and gridlock.

Statistics:

  • $10.5 billion: The amount the petroleum industry spent on environmental regulations in 1992.
  • $4: The cost (per barrel) of environmental regulations to the petroleum industry in 1992.
  • $37 billion: The expected cost of phase two of the reformulated gasoline program by 2000.
  • $31 billion: The combined value of all U.S. refineries.
  • $190 million - $270 million: The cost of complying with the toxicity characteristic rule regulating toxic wastes, as estimated by EPA.
  • Four lives every 100 years: The number of lives saved annually by complying with the toxicity characteristic rule, as estimated by EPA.

Sources:

  • Senate Environment and Public Works Committee hearing (date not specified)
  • Environmental Protection Agency (EPA)
  • Department of Transportation (DOT)
  • Office of Management and Budget (OMB)
  • Department of Justice (DOJ)
  • Senator James Inhofe (R-Okla.)
  • EPA Administrator Carol M. Browner
  • Senator Christopher (Kit) Bond (R-Mo.)
  • Senator Max Baucus (D-Mont.)
  • Senate Majority Leader Robert Dole (R-Kan.)
  • Senator Lauch Faircloth (R-N.C.)
  • President Clinton
  • Senate Governmental Affairs Committee
  • Sally Katzen, administrator of the OMB Office of Information and Regulatory Affairs