Self-Regulation Versus Public Regulation: An Analysis of Environmental and Safety Standard Setting in the Oil and Gas Pipeline Sector

Abstract

Still there occurs a large amount of accidental and non-accidental damage caused by running oil and gas pipelines. In fact, pipelines, similar to other industrial activities, cannot be kept completely safe from accidents. However, accidents caused by the pipelines are to a large extent preventable. Among the various policy instruments that are available, regulation may be considered as an appropriate instrument to guarantee the safety of oil and gas pipelines. This chapter shows that the protection of the public at large against personal injuries and the protection of the environment can be achieved through various types of both public and private standards. It is precisely this mix of public and private standards, as well as the use of a variety of different standards to regulate the safety of oil and gas pipelines, that will be the subject of this chapter. Standard setting and enforcement could also affect market integration. Indeed, regulatory reform is one of the central elements to overcome market failures in market integration. Keeping that in mind, this chapter holds that different standards should equally be considered in the regulatory reforms aiming at market integration with respect to oil and gas pipelines.