Regulatory capture in the US petroleum refining industry

Robert Gmeiner ()
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Robert Gmeiner: Kennesaw State University

Economia e Politica Industriale: Journal of Industrial and Business Economics, 2019, vol. 46, issue 4, No 2, 459-498

Abstract: Abstract The capture theory of regulation concludes that regulatory agencies tend to be captured by the firms they are regulating. This paper tests the capture theory in the recent environment of nuanced agency regulation by the administrative state, focusing on the US oil refining industry. Regulation has tended to narrow refiners’ margins, which harms nonintegrated oil refiners more than vertically integrated. Providing evidence of regulatory capture, complementary analysis of stock returns shows that regulations have benefited the stocks of vertically integrated firms. The narrowing of the margins is primarily due to rising input costs.

Keywords: Regulation; Crack spreads; Vertical integration; Rent seeking (search for similar items in EconPapers)
JEL-codes: D72 K23 L71 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1007/s40812-019-00134-w

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