Price Regulation and Environmental Externalities: Evidence from Methane Leaks
Using data from natural gas distribution utilities on expenditures and volume of methane leaked, this paper estimates the amount of money utilities are spending to abate leaks. Expenditures are suboptimal at less than the cost of gas itself.
- For decades, the Energy Information Administration has kept records of lost and unaccounted for gas, yet the data's usefulness has been criticized. However, there are empirical strategies to overcome the data quality issues.
- Natural gas distribution is a price-regulated industry and this can introduce distortions. This paper examines the outcome from allowing utilities to pass the cost of lost gas on to customers.
- Utilities are spending between $0 per Mcf to $0.48 per Mcf on leak detection and repair; this is considerably lower than the sample average cost of natural gas of $5.67 per Mcf.
Resources Radio — Aug 9, 2022
Sustainable Aviation Fuels, with Zia Abdullah
Zia Abdullah discusses the creation and viability of sustainable aviation fuels and outlines the challenges of scaling up their production and use.
Testimony and Public Comments — Aug 5, 2022
Inflation Reduction Act’s Proposed Methane Fee Would Have Negligible Impact on Natural Gas Prices
The impact on natural gas prices of the methane fee in the IRA would be negligible, and well under 1% of residential consumer prices.