We heeded this suggestion in our recent work—and find that repealing BLM’s 2016 methane rule would result in net costs of $814 million to $1.2 billion over 10 years, using the global estimate of the social cost of methane and adopting the rest of the new assumptions in BLM’s 2018 analysis. Using the Trump administration’s domestic social cost of methane, our analysis shows that repealing the rule would result in net benefits of $495 million to $860 million over 10 years. It’s worth noting here that the latter estimates are slightly smaller than those produced by the Trump administration’s 2018 analysis. (However, the 2018 analysis does not provide sufficient information to fully understand why these estimates differ despite correcting for the dollar year and discounting method, and we discuss this discrepancy further in our report.)
The Trump administration lists the compliance costs of BLM’s 2016 methane waste prevention rule among its main motivations for overturning it. If BLM, instead, were to use both the domestic and global estimates of the social cost of methane in assessing the benefits of the rule, the cost–benefit analysis would provide more comprehensive guidance. In deciding whether the rule should be repealed, the Trump administration should take into account that its goal of reducing regulatory burdens has the potential to result in large net costs to society. Even if the administration believes that large net costs are unlikely (given its stance on climate change), it should explicitly consider whether its goal—reducing compliance burdens for industry—warrants even the possibility of these large net costs.
In any event, this rule is not the only one aimed at the US oil and gas industry that’s up for renewed debate. The Trump administration has prioritized increasing the production of US oil and natural gas, in part through reducing federal regulatory burdens that the administration says restrict development. We’re working with others at RFF to understand what the impacts on industry and the public might be if some of these regulations are eliminated, modified, or delayed, and will report back with more detailed analysis in the coming weeks.
Stay tuned for the full report on the cost–benefit analyses of BLM’s 2016 methane rule; this article will be updated with a link when it is published. Five other reports in this series—Cost–Benefit Analyses of Eliminating or Modifying US Oil and Gas Regulations—examining different rules as well as a cross-cutting analysis of all the results will also be made available as they are published.