Cost-Benefit Analysis of Proposed California Oil and Gas Refinery Regulations

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 t