How much does health, environmental and safety regulation add to the cost of producing a barrel of oil?
According to a new study by Lux Research, it adds about 70 cents per barrel or less than 1%.
A health, safety, and environmental regulatory regime that adds less than 1% to the cost of a barrel of oil is certainly not over regulating. Indeed, at these numbers, the danger is under-investment in health, safety, and environmental protection.
Lux Research calculates global spending on health, safety, and environmental regulation by the oil and gas industry stands at $35 billion and projects a 60% increase over 17 years or a slow annual rate of growth.
http://www.luxresearchinc.com/news-and-events/press-releases/167.html. Lux also states the accident rate has declined by 50% in the last decade.
The USA accounts for 39% of global spending to comply with health, safety, and environmental regulations. The USA, however, accounts for about just 8% of global oil production. Given how much of the global spending on regulatory compliance is in the USA, substantial parts of the world are imposing virtually no health, safety, and environmental costs.
Lux also states that, when oil is spilt in the USA (a not unusual event) penalties amount to $8,000 per barrel. Even in the USA, where the regulatory regime is among the world's strongest, the real danger is under-investment in health, safety, and environmental protection and not too much regulatory oversight or compliance cost.