Taming drillers through legislative action: Evidence from Pennsylvania’s shale gas industry

摘要

Highlights?State of Pennsylvania amended state-level oil and gas regulations in 2012.?Higher bonding requirements, unconventional well fees, raised civil penalty limits.?Empirical analysis of shale gas producers’ response.?Producers to drilled fewer wells per month.?Improved environmental performance; fewer recorded violations per inspection.AbstractIn 2012 Pennsylvania amended its Oil and Gas Act to tighten regulations on development of shale gas resources. Three key pecuniary provisions were annual well fees, increased bonding requirements, and higher penalty limits for violations. We analyze the effects of these mandates on well operator behavior using data on well operations and inspections over the period 2000–2013. After deriving theoretical predictions, we empirically examine each provision’s effect on firm behavior in two aspects: (i) acquisition of new well permits, and (ii) regulatory violations. Overall, we find the amendments induced firms to acquire fewer permits and elevate environmental protection effort.]]>