IDEAS home Printed from https://ideas.repec.org/a/eee/resene/v48y2017icp19-29.html
   My bibliography  Save this article

“No shut-off” policies and natural gas consumption

Author

Listed:
  • Clark, David E.
  • Dybicz, Catherine
  • Hanson, Andrew
  • Nourzad, Farrokh

Abstract

Many U.S. states have regulations that prevent natural gas utility companies from turning off service to non-paying consumers. The goal of these policies, termed “no shut-off” (NSO) regulations, is to provide a guaranteed minimum level of residential comfort by reducing the marginal cost of consumption to zero for a period of time. This paper employs a difference-in-difference approach applied to residential U.S. Energy Information Administration data to evaluate whether NSO policies generate higher levels of gas usage. Our preferred specifications suggest that activation of a NSO policy increases natural gas consumption by between 4.7–4.8%, resulting in a total increase of between 66 and 67 billion cubic feet of natural gas consumed per winter season in covered states, at a value of as much as $950–970 million annually.

Suggested Citation

  • Clark, David E. & Dybicz, Catherine & Hanson, Andrew & Nourzad, Farrokh, 2017. "“No shut-off” policies and natural gas consumption," Resource and Energy Economics, Elsevier, vol. 48(C), pages 19-29.
    • Handle: RePEc:eee:resene:v:48:y:2017:i:c:p:19-29
    DOI: 10.1016/j.reseneeco.2017.01.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S092876551630063X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.reseneeco.2017.01.002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Richard K. Crump & V. Joseph Hotz & Guido W. Imbens & Oscar A. Mitnik, 2009. "Dealing with limited overlap in estimation of average treatment effects," Biometrika, Biometrika Trust, vol. 96(1), pages 187-199.
    2. Lucas W. Davis & Erich Muehlegger, 2010. "Do Americans consume too little natural gas? An empirical test of marginal cost pricing," RAND Journal of Economics, RAND Corporation, vol. 41(4), pages 791-810, December.
    3. Levinson, Arik & Niemann, Scott, 2004. "Energy use by apartment tenants when landlords pay for utilities," Resource and Energy Economics, Elsevier, vol. 26(1), pages 51-75, March.
    4. Steven L. Puller & Jeremy West, 2013. "Efficient Retail Pricing in Electricity and Natural Gas Markets," American Economic Review, American Economic Association, vol. 103(3), pages 350-355, May.
    5. Jaffe, Adam B. & Stavins, Robert N., 1994. "The energy paradox and the diffusion of conservation technology," Resource and Energy Economics, Elsevier, vol. 16(2), pages 91-122, May.
    6. Franz Wirl & Wolfgang Orasch, 1998. "Analysis of United States' Utility Conservation Programs," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 13(4), pages 467-486, August.
    7. Hunt Allcott & Nathan Wozny, 2014. "Gasoline Prices, Fuel Economy, and the Energy Paradox," The Review of Economics and Statistics, MIT Press, vol. 96(5), pages 779-795, December.
    8. Jerry A. Hausman, 1979. "Individual Discount Rates and the Purchase and Utilization of Energy-Using Durables," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 33-54, Spring.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pashchenko, Dmitry, 2018. "First law energy analysis of thermochemical waste-heat recuperation by steam methane reforming," Energy, Elsevier, vol. 143(C), pages 478-487.
    2. Girma T. Chala & Abd Rashid Abd Aziz & Ftwi Y. Hagos, 2018. "Natural Gas Engine Technologies: Challenges and Energy Sustainability Issue," Energies, MDPI, vol. 11(11), pages 1-44, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Todd D. Gerarden & Richard G. Newell & Robert N. Stavins, 2017. "Assessing the Energy-Efficiency Gap," Journal of Economic Literature, American Economic Association, vol. 55(4), pages 1486-1525, December.
    2. Hunt Allcott & Michael Greenstone, 2012. "Is There an Energy Efficiency Gap?," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 3-28, Winter.
    3. Sallee, James M. & West, Sarah E. & Fan, Wei, 2016. "Do consumers recognize the value of fuel economy? Evidence from used car prices and gasoline price fluctuations," Journal of Public Economics, Elsevier, vol. 135(C), pages 61-73.
    4. Daziano, Ricardo A., 2015. "Inference on mode preferences, vehicle purchases, and the energy paradox using a Bayesian structural choice model," Transportation Research Part B: Methodological, Elsevier, vol. 76(C), pages 1-26.
    5. Brucal, Arlan & Roberts, Michael J., 2019. "Do energy efficiency standards hurt consumers? Evidence from household appliance sales," Journal of Environmental Economics and Management, Elsevier, vol. 96(C), pages 88-107.
    6. Andreas Mense, 2018. "The Value of Energy Efficiency and the Role of Expected Heating Costs," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 71(3), pages 671-701, November.
    7. Gerarden, Todd D. & Newell, Richard G. & Stavins, Robert N. & Stowe, Robert C., 2015. "An Assessment of the Energy-Efficiency Gap and Its Implications for Climate Change Policy," Climate Change and Sustainable Development 202116, Fondazione Eni Enrico Mattei (FEEM).
    8. Louis-Gaëtan Giraudet & S. Houde, 2013. "Double moral hazard and the energy efficiency gap," Post-Print hal-00799725, HAL.
    9. Pratt, Bryan, 2020. "Property Tenure and Determinants of Sensitivity to Price and Non-Price Conservation Instruments," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304283, Agricultural and Applied Economics Association.
    10. Andor, Mark & Gerster, Andreas & Sommer, Stephan, 2016. "Consumer Inattention and Decision Heuristics: The Causal Effects of Energy Label Elements," VfS Annual Conference 2016 (Augsburg): Demographic Change 145778, Verein für Socialpolitik / German Economic Association.
    11. Chaudhuri, Kausik & Huaccha, Gissell, 2023. "Who bears the energy cost? Local income deprivation and the household energy efficiency gap," Energy Economics, Elsevier, vol. 127(PA).
    12. Louis-Gaëtan Giraudet & Sébastien Houde, 2015. "Double Moral Hazard and the Energy Efficiency Gap," Working Papers hal-01260907, HAL.
    13. Kenneth Gillingham & Karen Palmer, 2014. "Bridging the Energy Efficiency Gap: Policy Insights from Economic Theory and Empirical Evidence," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 8(1), pages 18-38, January.
    14. Arakawa, Kiyoshi, 2022. "Assessing consumer valuations of future costs versus purchase prices in Japan's auto market," Economics of Transportation, Elsevier, vol. 30(C).
    15. Heather Klemick & Elizabeth Kopits & Keith Sargent & Ann Wolverton, 2014. "Heavy-Duty Trucks and the Energy Efficiency Paradox," NCEE Working Paper Series 201402, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Jan 2014.
    16. Richard S.J. Tol, 2018. "Energy and Climate," Working Paper Series 1618, Department of Economics, University of Sussex Business School.
    17. Oskari Harjunen & Matti Liski, 2014. "Not so Myopic Consumers - Evidence on Capitalization of Energy Technologies in a Housing Market," CESifo Working Paper Series 4989, CESifo.
    18. Shigeru Matsumoto, 2018. "Consumer valuation of energy-saving features of residential air conditioners with hedonic and choice models," Empirical Economics, Springer, vol. 55(4), pages 1779-1806, December.
    19. Arlan Brucal & Michael Roberts, 2015. "Can Energy Efficiency Standards Reduce Prices and Improve Quality? Evidence from the US Clothes Washer Market," Working Papers 2015-5, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.
    20. Stavins, Robert & Jaffe, Adam & Newell, Richard, 2000. "Technological Change and the Environment," Working Paper Series rwp00-002, Harvard University, John F. Kennedy School of Government.

    More about this item

    Keywords

    Natural gas usage; Utility regulation;

    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:resene:v:48:y:2017:i:c:p:19-29. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505569 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.