The Environmental Consequences of Price Regulation: Lessons from the US Natural Gas Market

Alexander Hill

Journal of the Association of Environmental and Resource Economists, 2025, vol. 12, issue 4, 881 - 909

Abstract: The imposition of a US wellhead natural gas price ceiling from 1954 to 1989 distorted household heating choices from cleaner natural gas to heating oil. Using a microdata-based approach to estimate counterfactual residential energy consumption from 1960 to 2019, this study shows that the price ceiling led to an average of $9.13 billion annually in emissions damage through 2019. This amount more than doubles previous estimates of the cost of the price ceiling. Losses were highest in the Northeast and Mid-Atlantic and peaked from 1968 to 1977 at $21.2 billion annually.

Date: 2025
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