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Cost-benefit analysis of proposed California oil and gas refinery regulations

Author: Daniel Gonzales; Timothy R Gulden; Aaron Strong; W Hoyle
Publisher: Santa Monica, Calif. : RAND Corporation, [2016]
Edition/Format:   Print book : EnglishView all editions and formats
Summary:
The research reported here assessed the costs and benefits of the proposed California process safety management (PSM) and California Accidental Release Prevention regulations that are designed to improve safety at oil and gas refineries in California. The authors estimate these costs and benefits in four categories: costs to industry (to implement the regulation), costs to society (pass-through of certain industry  Read more...
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Details

Material Type: Internet resource
Document Type: Book, Internet Resource
All Authors / Contributors: Daniel Gonzales; Timothy R Gulden; Aaron Strong; W Hoyle
ISBN: 0833094122 9780833094124
OCLC Number: 945582444
Notes: "RR-1421-DIR"--Page 4 of cover.
Description: xxvi, 98 pages : illustrations (some color) ; 26 cm
Contents: Introduction --
Overview of the Proposed Regulations --
Methodology --
Implementation Costs of the Proposed Regulation --
Major Incidents and Worker Deaths at California Refineries --
Impact of Major Refinery Incidents on California Gasoline Prices --
Macroeconomic Impact Estimates --
Potential Benefits to Industry --
Balancing Costs and Benefits --
Conclusions --
Appendix: Structured Interview Questions.
Responsibility: Daniel Gonzales, Timothy R. Gulden, Aaron Strong, William Hoyle.

Abstract:

The research reported here assessed the costs and benefits of the proposed California process safety management (PSM) and California Accidental Release Prevention regulations that are designed to improve safety at oil and gas refineries in California. The authors estimate these costs and benefits in four categories: costs to industry (to implement the regulation), costs to society (pass-through of certain industry costs), benefits to industry, and benefits to society. This report examines the PSM activities and their implementation costs called for in the proposed regulation. Many, if not all, of these costs will likely be passed on to California consumers in the form of higher prices for petroleum products. The new PSM regulations are designed to improve safety at California refineries, which might result in fewer major refinery incidents and fewer releases of hazardous materials from refineries. Because the number of major refinery incidents might be reduced under the proposed regulation, the regulation could provide safety and health benefits to the public in nearby communities and might provide other economic benefits. This report examines these potential benefits. To compare the costs and benefits of the regulations, the authors use a break-even analysis framework. They estimate the break-even point for effectiveness of the proposed regulations to be about 7.3 percent. That is, given the frequency and cost of recent costly major incidents, the best estimate of the cost of the regulations requires reducing the frequency of major incidents by around 7.3 percent to justify the regulations' cost.

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