The American Clean Air Act and Producer Returns across the Oil and Gas Industry

:The Environmental Protection Agency oversees policies that reduce harmful effluents related to human health and environmental quality. At various stages of production, firms in the oil and gas industry are instrumental in implementing EPA policies. The original 1970s EPA was revised in 1990 to account for acid rain and to reduce motor vehicle emissions. These revisions may have reduced oil and gas shareholder wealth. As firms sought to adjust to a changing regulatory environment, this study finds that the EPA’s 1990 revision effects were minimal on firm value, and across the oil and gas industry, revisions to the 1990 EPA’s role did not affect shareholder wealth from equity and commodity returns. For oil and gas producers, it is difficult to identify and measure regulatory effects on shareholder wealth, indicating that criterion pollutant reduction need not systematically reduce shareholder wealth.