What Are the Benefits of Oil Deregulation?

Oil companies have been accused of being the only ones profiting from deregulation.

Oil prices often make consumers angry. When they see oil companies earning record profits, it makes them even angrier. But regulation could raise the price of gas at the pump even higher.

Reversing the Law

Oil deregulation is the reduction of laws governing the oil products industry. A Congressional act in 1998 removed the Federal government's ability to regulate pricing, import and export of oil, their retail locations or their refineries. They are still required to report to the Department of Energy, especially in an emergency such as the BP oil spill of 2010.

Tax Benefits

Removing required taxes on oil products could lower the payment for consumers. Products in stores that require oil products to be created, such as plastic, any product shipped nationwide, will become cheaper.

Competition

Deregulation fosters competition. Under strict laws, oil companies simply need to meet recommended standards. In a deregulated industry, companies are competing with one another to be the best. Since there is no set bar, they are always on their toes to compete. Plus, under regulation, they wouldn't have to compete for customers since the entry into the market for new companies was insurmountable.

References

• Commission on Growth and Development; The Political Economy of Reform during the Ramos Administration
• "Leading Issues in Competition, Regulation and Development"; Paul Cook; 2004

Resources

• "Economic Times"; Oil Deregulation Positive Sign for Markets: IV Subramanium, Quantum Advisors