Publications: Notes at the Margin

Santayana Moments (April 22, 2019)


We titled this report "Santayana Moments" in honor of the philosopher and the late congressman from Michigan, John Dingell. Our focus this week—the potential effects of the IMO 2020 rule for marine fuel sulfur content—should not surprise anyone. Our approach, though, is different from our previous analyses because it involves looking back at the impact of past introductions of new environmental regulations on energy producers and consumers. Our examination suggests that environmental regulators have learned lessons from their efforts to control vehicle emissions. These lessons, though, come with a tradeoff. In particular, the requirement for immediate compliance has increased dramatically with each round of new rulemaking, as has market chaos.


These historical lessons seem to have escaped many if not most of those who write on the IMO regulation. Report after report discusses various hypothetical outcomes after the rule takes effect. Few, if any, have researched past episodes of new regulations being imposed. This failure to study history may have consequences. Over the next twelve to twenty-four months, the chronicle of environmental regulation will likely be expanded by another example of regulatory rigidity accompanied by market turmoil.


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