Under the direction of Professor David Hounshell, Mr. Hugh Gorman is examining the U.S. petroleum industry as a case study of the interaction between environmental regulations and technological development. The working hypothesis is that when an economic externality is in dispute--in this case, the negative costs associated with discharges into the environment--significant innovation occurs only after the interested actors reach consensus on how to measure, monitor, and assign liability associated with the externality. Only then can a technological, legal, and social infrastructure emerge that encourages change in the direction of consensus. Mr. Gorman is examining each sector of the petroleum industry--production, transportation, refining, and consumption--to identify, at various intervals in the period 1921 to 1981, what engineers and managers perceived to be the state-of-the-art in preventing harmful discharges to the environment. What incentives did they have in further reducing these discharges? To what degree did direct economic losses serve as such an incentive? What incentives did insurance companies and professional organizations provide? What were the main barriers, technological or otherwise, preventing firms from reducing their discharges? What role did government regulations play, and was new technology or scientific knowledge needed to implement or enforce those regulations'? In summary, what patterns can be identified that advance our knowledge of how environmental regulations and technological development interact in a market society?
