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The Effect of the Energy Policy and Conservation Act (EPCA) Regulation of Petroleum Product Prices, 1976-1981

Recent events have led to renewed interest in the petroleum industry. Over the years, the American government has imposed a number of regulatory regimes on this industry. One of the most interesting was the price regulation and product allocation system set in place by the Energy Policy and Conservation Act of 1975 (EPCA) which lasted from 1976 until 1981. To determine the impact of this regime, supply and demand equations are used to derive a reduced form model to test whether the other-things-equal prices of petroleum products were significantly lower or higher during the EPCA period than during the comparatively unregulated 1980s. With some exceptions, the results indicate that the EPCA regulation system either raised prices or had no effect. These results should lead to caution on the part of policy-makers. Even the immediate goal of the policy, lowering prices, did not usually occur.

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Energy Specializations: Petroleum – Markets and Prices for Crude Oil and Products; Petroleum – Policy and Regulation; Energy and the Environment – Policy and Regulation

JEL Codes: Q41: Energy: Demand and Supply; Prices, Q48: Energy: Government Policy, L71: Mining, Extraction, and Refining: Hydrocarbon Fuels, Q35: Hydrocarbon Resources, C53: Forecasting Models; Simulation Methods

Keywords: Energy Policy and Conservation Act (EPCA), US, oil prices, conservation, bootstrap

DOI: 10.5547/ISSN0195-6574-EJ-Vol24-No2-3

Published in Volume24, Number 2 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.


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