An assessment of the effect of partisan ideology on shale gas production and the implications for environmental regulations

Abstract

The production of shale gas depends not only on shale resources and capital investment but also on having a flexible and stable policy environment. This paper examines whether and how partisan ideology affects the extraction of shale gas. We use panel fixed effects as well as the system–generalized method of moments approach with quarterly panel data from 15 US states over the period 2007−2016. We consider not only the political ideology of the state governor but also the state legislature’s influence on the governor, control over the governorship and the legislature by the same party, the reelection of an incumbent government, and turnover in the political party in power. The results indicate that because the right-leaning party is more likely to support shale gas development, when a member of that party heads the state government, shale gas production performance is higher than when the left-leaning party is in power. Therefore, the production of shale gas rises with a turnover in political control from left to right, reelection of a right-leaning incumbent, and more right-leaning power in the state legislature. We believe our results shed light on the role of partisan ideology in shale gas production, which has implications for environmental regulations.