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Home > ESR > Vol. 16 (2009) > Iss. 1

 

Abstract

Between 1986 and 2006 U. S. refinery capacity increased by twelve percent. Over the same time period, U.S. demand for refined petroleum products increased by 29 percent. Many have suggested that this lack of investment, and thus higher petroleum product prices, can be attributed to increased environmental regulation and increased influence from environmental pressure groups. This paper investigates empirically this potential influence on investment in refinery capacity additions/subtractions between 1988 and 2006. While there appears to be some evidence to support the notion that the environmental influence has depressed such investment, this impact appears to be relatively small in magnitude.