Clearing the Air? The Effects of Gasoline Content Regulation on Air Quality

TLDR

The study investigates whether US gasoline content regulations have effectively lowered ozone pollution. The regulations allow cost‑minimizing compliance that fails to curb emissions of ozone‑forming compounds. Federal gasoline standards with flexible compliance did not improve air quality, whereas California’s strict, targeted regulations that remove specific harmful compounds did reduce ozone pollution. JEL codes: L51, L71, L78, Q53, Q58.

Abstract

This paper examines whether US gasoline content regulations, which impose substantial costs on consumers, have successfully reduced ozone pollution. We take advantage of spatial and temporal variation in the regulations' implementation to show that federal gasoline standards, which allow refiners flexibility in choosing a compliance mechanism, did not improve air quality. This outcome occurred because minimizing the cost of compliance does not reduce emissions of those compounds most prone to forming ozone. In California, however, we find that precisely targeted, inflexible regulations requiring the removal of particularly harmful compounds significantly improved air quality. (JEL L51, L71, L78, Q53, Q58)