Academic literature on the topic 'Price regulation Australia'

Carbon reporting and emissions trading in Australia—both of which, in 2007, seemed unlikely—came into effect with the implementation of mandatory data reporting from July 2008 (Australia) and January 2010 (USA); the onus lies with emitting corporations to determine whether they must report. At the time of writing it is also likely that Australia and the USA will join Europe in placing a price on carbon by 2013. The background to the Australian regulations will be explored in this paper, along with comparisons made to regulations in other jurisdictions, including the new reporting scheme in the USA. To date, much of the public discussion in these countries has centred on the financial aspects of a carbon tax or emissions trading scheme; however, significant challenges exist in identifying and quantifying the emissions that the financial community seeks to trade, and business community understanding of the details of greenhouse emissions is not strong. Case studies from the Australian oil and gas and related industries will be used to explain counter-intuitive aspects of greenhouse gas emissions and their regulation, and to illustrate challenges in emissions measurement and reporting.

Broadband prices differ significantly throughout the world, however discussion of why receives little attention in the academic and policy literature. Focussing on landline broadband, this exploratory article helps fill a knowledge gap by discussing some methodologies for comparing broadband prices between countries, and suggesting five factors that influence broadband prices: demand, supply, average price level, regulation, and physical/infrastructural factors. In this discussion, we also examine where Australia sits in relation to global broadband prices.

Broadband prices differ significantly throughout the world, however discussion of why receives little attention in the academic and policy literature. Focussing on landline broadband, this exploratory article helps fill a knowledge gap by discussing some methodologies for comparing broadband prices between countries, and suggesting five factors that influence broadband prices: demand, supply, average price level, regulation, and physical/infrastructural factors. In this discussion, we also examine where Australia sits in relation to global broadband prices.

Purpose – The purpose of this paper is to evaluate the effectiveness of this legislative reform in the state of South Australia (SA) through an examination of the relationship between listed or advertised price and transaction prices before and after the changes in regulation. Between 2000 and 2008, legislative changes took place throughout Australia to make real-estate transactions more transparent and to deal with misleading conduct by real-estate agents. The practice of “charm” or “bait” pricing was targeted. This denotes the under-quoting of estimated selling prices in real-estate sale advertisements which can be considered deceptive or even fraudulent. Design/methodology/approach – The study area is Adelaide, the state capital of SA and includes analysis of first and last advertised prices and eventual selling price for > 120,000 residential sales transactions over a nine-year period between 2003 and 2011. The analysis to test these hypotheses included, first, a descriptive evaluation of the percentage price difference over time and a spatial breakdown of mean percentage price difference before and after legislation. Second, for each hypothesis, the change was tested by measuring the variance of the percentage change, with significance established through the Levene and Brown–Forsythe tests, rather than by the mean percentage change. Findings – The results, both descriptive and statistical, support the effectiveness of the reform in legislation. Research limitations/implications – The study has application in terms of agents as social gatekeepers and confirms the role of regulation to ensure market values are achieved and consumers not disadvantaged. With friction in the market, imperfect information and the possible behavioural responses of land agents, there may be incomplete market correction of underpricing strategies. This paper confirms the effectiveness of one such market intervention. Social implications – Some half a million dwellings are purchased in Australia every year. Annually, in the state of SA, some 53,000 dwellings are financed to be purchased or built. These levels of purchase reflect national home ownership rates of about 69 per cent, with some 33 per cent of Australians owning their houses outright and a growing number, some 36 per cent, owners with a mortgage. Australian households also move house relatively frequently. In 2008, 43 per cent of Australians reported moving in the previous 5 years, 15 per cent had moved 3 or more times. The most common reasons for moving were twofold, either to buy a house or to buy a bigger house. These levels of purchase, home ownership and mobility underpin the importance and viability of some 10,000 real-estate services businesses in Australia; a sector which, up to 2,000, was largely self-regulated. Originality/value – This paper is one of the first in Australia to effectively quantify the success of legislative reform on residential agency behaviour.

Purpose This paper aims to inform social responsibility and social policy by describing the brand strategy of Australia’s largest tobacco manufacturer, British American Tobacco Australia (BATA), the year following the introduction of plain packaging and other regulation. Tobacco controls are a proven catalyst for reducing smoking, but manufacturers adapt swiftly seeking to minimise the impact of regulatory change. Design/methodology/approach BATA’s strategy was determined using 2012-2014 tobacco ingredient reports, recommended retail price lists and a supermarket retail audit. Findings The research identified over 70 BATA brand variants, offered in diverse packaging options, with new products and modified names appearing since 2012. In total 14 main brands are highly differentiated by price, with 45 per cent difference between the cheapest and the most expensive. Volume discounting occurs across packaging ranges, with twin packs offering best value and prices up to 10 per cent lower than those of single packs. Originality/value The research originality stems from the triangulation of three different data resources to establish brand strategy following increased regulation. The study confirms ongoing market segmentation using highly differentiated ranges, and it reveals the unintended consequences of corporate responses to regulation. Evolving variant names communicate product information and imagery previously imparted by pack design. Pricing strategies enable smokers to offset substantial excise increases through brand switching and volume buying. The research, therefore, reveals the potential for regulating these as yet unrestricted elements to enhance the impact of plain packaging and other tobacco controls, thereby further reducing the social impact of smoking.

Purpose – Housing is a composite asset comprising land and improved components varying as proportions of total value over space and time. Theory suggests land and improvements (structures) are unique goods responding differently to economic stimuli. This paper aims to test the expectation of different overall house price changes in response to variation in land and improved components. Design/methodology/approach – House price dynamics are decomposed to analyse the influence of land and structure components for the city of Perth, Australia both at aggregate level and for spatially defined housing sub-regions, sample period 1995-2010. Findings – Values of land and improvements on that land evolve differently over time and are significantly influenced by the magnitude of land leverage. The study extends previous research through extensive spatial disaggregation of a larger more detailed data set than previously used in studies of this type confirming significant variation in land leverage ratios, overall price change and growth rates for land and improvements in sub-regional markets defined by spatial criteria. Research limitations/implications – The results suggest an important role for policy development with respect to housing affordability and supply side regulation of land in large urban housing markets. Practical implications – The results suggest important implications for hedonic price analysis of housing markets. The inclusion of land leverage variables in hedonic regression could remove coefficient bias associated with omitted location amenity variables. Originality/value – The paper adapts methodology from previous studies but extends previous literature through detailed analysis of a large Australian housing market (Perth) enabling extensive spatial disaggregation of the sample and providing greater insight to spatial variation of land leverage than in previous studies.

Abstract Forecasting supply and demand is fundamental to the sustainability of the water system. Demand for urban water seems on an ever-upward trajectory, with use increasing twice as quickly as population throughout the 20th century. However, data from Ballarat, a city in south-eastern Australia, show that despite this conventionally held wisdom, total water usage actually peaked over 30 years ago. While the 1997–2009 ‘Millennium Drought’ had some effect, the decline commenced many years before. Initially, this was due to a reduction in external domestic water use, which correlates well with an increase in water price. However, the effect was found to not be purely economic as the price was not volumetric-based. Internal water use seems more affected by technological advances and regulatory controls. Interestingly, there was no relationship found between rainfall and water demand. The role of price, water-reduction education programmes, water-efficient technology and regulation supports previous research that a multifaceted approach is required when developing demand-reduction policies and strategies. This finding emphasises the importance of understanding the component of consumptive behaviour being targeted, and ensuring that policies being implemented are appropriate for the desired behavioural change.

Markets for Australian beef throughout the 20th century have been moulded by world wars, economic depressions, droughts, transport technology, cattle breeding, trade barriers, global competition, livestock disease eradication, human health risks, food safety, Australian Government policy, consumerism and beef quality. Major ‘shocks’ to beef marketing include the development of successful shipments of chilled carcases to Britain in the 1930s, the widespread trade disruption caused by World War II, expansion (early 1950s) and then a reduction in beef exports to Britain (1956), the introduction and then proliferation of Bos indicus derived cattle in northern Australia (1960s), licensing and upgrading of Australian abattoirs to export to USA and the consequential brucellosis and tuberculosis eradication campaign leading to record export tonnages of Australian processing beef to USA (1960–70). In 1980, increased beef trade to Japan began, leading in the late 1980s to expansion of high-quality grain finished products into that market. By 1993, beef exports to Japan (280.5 kt) exceeded those to USA (274.4 kt), signalling the significant shift in beef exports to Asia. Commencing in about 1986, the USA recognised the value of beef exports to Asian markets pioneered by Australia. Australia’s share of the Japanese and South Korean markets has been under intense competition since that time. Another major influence on Australia’s beef market in the early 1990s was growth in live cattle exports to Asian markets in Indonesia, Malaysia and the Philippines. Live exports accounted for 152000 heads in 1992 and 858000 heads in 1996. Improved management systems (e.g. fences) and consequent regulation of cattle supply even in the wet season, a by-product of the brucellosis and tuberculosis eradication campaign, were indirect drivers of the growth in live exports. Throughout the period 1940–2000, domestic consumption of beef and veal declined from 68 to 33.3 kg/head.year, reflecting competition from other foods, perceptions of health risks, price of beef, periodic food safety scares, vegetarianism, changes in lifestyle and eating habits and lack of consistency of eating quality of beef. Despite this decline, the domestic Australian beef market still consumes a significant component (37%) of total Australian beef production. In 1984–85, the reform of the Australian Meat and Livestock Corporation set in train a major directional change (‘New Direction’) of the beef sector in response to beef market trends. Under Dick Austen’s leadership, the Australian Meat and Livestock Corporation changed the industry’s culture from being ‘production-driven’ to being ‘consumer-driven’. Market research began in Australia, Japan and Korea to establish consumer preferences and attitudes to price, beef appearance and eating quality. Definite consumer requirements were identified under headings of consistency and reliability. The AusMeat carcass descriptors were introduced and a decade later traits like tenderness, meat colour, fat colour, meat texture, taste, smell, and muscle size were addressed. These historical ‘shocks’ that shaped the Australian beef markets have all been accompanied by modification to production systems, breeding programs, herd structure, processing procedures, advertising and promotion, meat retailing and end-use. The increasing importance of the food service sector and the ‘Asian merge’ influence on beef cuts usage in restaurant meals and take-away products are the most recognisable changes in the Australian food landscape. The Cooperative Research Centre¿s research portfolio was built around the changing forces influencing beef markets in the early 1990s. Australia needed to better understand the genetic and non-genetic factors affecting beef quality. One example was the poor success rate of cattle being grain-fed for the Japanese premium markets. Another was the relative contribution of pre- and post-slaughter factors to ultimate eating quality of beef. The Meat Standards Australia scheme was launched in 1997 to address this problem in more detail. The Cooperative Research Centre contributed significantly to this initiative. In the year 2001, Australia, with only 2.5% of world cattle numbers retains the position of world number one beef trader. We trade to 110 countries worldwide. The Australian beef sector is worth A$6 billion annually. The diversity of Australian environments, cattle genotypes and production systems provides us with the ability to meet diverse specifications for beef products. A new set of market forces is now emerging. Strict accreditation rules apply to Australian producers seeking access to the lucrative European Union market. Transmissible spongiform encephalopathies like bovine spongiform encephalopathy and scrapie are a continuing food safety concern in Europe. This and the foot and mouth disease outbreak in Britain early in 2001 have potentially significant indirect effects on markets for Australian beef. And the sleeping giant, foot and mouth disease-free status of Latin American countries Brazil, Uruguay and Argentina continues to emerge as a major threat to Australian beef markets in Canada and Taiwan. As in the past, science and technology will play a significant role in Australia¿s response to these market forces.

Markets for Australian beef throughout the 20th century have been moulded by world wars, economic depressions, droughts, transport technology, cattle breeding, trade barriers, global competition, livestock disease eradication, human health risks, food safety, Australian Government policy, consumerism and beef quality. Major ‘shocks’ to beef marketing include the development of successful shipments of chilled carcases to Britain in the 1930s, the widespread trade disruption caused by World War II, expansion (early 1950s) and then a reduction in beef exports to Britain (1956), the introduction and then proliferation of Bos indicus derived cattle in northern Australia (1960s), licensing and upgrading of Australian abattoirs to export to USA and the consequential brucellosis and tuberculosis eradication campaign leading to record export tonnages of Australian processing beef to USA (1960–70). In 1980, increased beef trade to Japan began, leading in the late 1980s to expansion of high-quality grain finished products into that market. By 1993, beef exports to Japan (280.5 kt) exceeded those to USA (274.4 kt), signalling the significant shift in beef exports to Asia. Commencing in about 1986, the USA recognised the value of beef exports to Asian markets pioneered by Australia. Australia’s share of the Japanese and South Korean markets has been under intense competition since that time. Another major influence on Australia’s beef market in the early 1990s was growth in live cattle exports to Asian markets in Indonesia, Malaysia and the Philippines. Live exports accounted for 152000 heads in 1992 and 858000 heads in 1996. Improved management systems (e.g. fences) and consequent regulation of cattle supply even in the wet season, a by-product of the brucellosis and tuberculosis eradication campaign, were indirect drivers of the growth in live exports. Throughout the period 1940–2000, domestic consumption of beef and veal declined from 68 to 33.3 kg/head.year, reflecting competition from other foods, perceptions of health risks, price of beef, periodic food safety scares, vegetarianism, changes in lifestyle and eating habits and lack of consistency of eating quality of beef. Despite this decline, the domestic Australian beef market still consumes a significant component (37%) of total Australian beef production. In 1984–85, the reform of the Australian Meat and Livestock Corporation set in train a major directional change (‘New Direction’) of the beef sector in response to beef market trends. Under Dick Austen’s leadership, the Australian Meat and Livestock Corporation changed the industry’s culture from being ‘production-driven’ to being ‘consumer-driven’. Market research began in Australia, Japan and Korea to establish consumer preferences and attitudes to price, beef appearance and eating quality. Definite consumer requirements were identified under headings of consistency and reliability. The AusMeat carcass descriptors were introduced and a decade later traits like tenderness, meat colour, fat colour, meat texture, taste, smell, and muscle size were addressed. These historical ‘shocks’ that shaped the Australian beef markets have all been accompanied by modification to production systems, breeding programs, herd structure, processing procedures, advertising and promotion, meat retailing and end-use. The increasing importance of the food service sector and the ‘Asian merge’ influence on beef cuts usage in restaurant meals and take-away products are the most recognisable changes in the Australian food landscape. The Cooperative Research Centre¿s research portfolio was built around the changing forces influencing beef markets in the early 1990s. Australia needed to better understand the genetic and non-genetic factors affecting beef quality. One example was the poor success rate of cattle being grain-fed for the Japanese premium markets. Another was the relative contribution of pre- and post-slaughter factors to ultimate eating quality of beef. The Meat Standards Australia scheme was launched in 1997 to address this problem in more detail. The Cooperative Research Centre contributed significantly to this initiative. In the year 2001, Australia, with only 2.5% of world cattle numbers retains the position of world number one beef trader. We trade to 110 countries worldwide. The Australian beef sector is worth A$6 billion annually. The diversity of Australian environments, cattle genotypes and production systems provides us with the ability to meet diverse specifications for beef products. A new set of market forces is now emerging. Strict accreditation rules apply to Australian producers seeking access to the lucrative European Union market. Transmissible spongiform encephalopathies like bovine spongiform encephalopathy and scrapie are a continuing food safety concern in Europe. This and the foot and mouth disease outbreak in Britain early in 2001 have potentially significant indirect effects on markets for Australian beef. And the sleeping giant, foot and mouth disease-free status of Latin American countries Brazil, Uruguay and Argentina continues to emerge as a major threat to Australian beef markets in Canada and Taiwan. As in the past, science and technology will play a significant role in Australia¿s response to these market forces.

Price cap regulation establishes a regulatory framework which endeavours to use the superior information and profit maximising tendencies of the regulated firm to induce it eventually to obtain productive and allocative efficiency. A price cap is a specific limit on a weighted sum of the prices set by the regulated firm in each period which ensures that constrained profit maximising price changes increase a measure of consumer surplus. The long-run efficiency properties of the different types of price caps depend, inter alia, on whether the limit on changes is based on cost or revenue, the basis of the weights on price changes, the planning horizon of the firm, structure of prices set by the firm, and the stability of costs and demands. The economic literature on price cap regulation is reviewed, and extensions of the simple models consider the problems of indexing for changing costs and demands, the consequences of applying the cap only to a sub-set of the outputs of the firm, the division of previously uniformly-priced products and the introduction of new services. Regulatory reforms of the Australian telecommunications industry commenced in 1989, and included two triennia of price cap regulation applied to the Australian Telecommunications Corporation (Telecom), the Overseas Telecommunications Corporation (OTC), and to the corporation formed by their merger in 1992. The first triennium applied a form of a past revenue-based price cap, indexed for inflation and changes in cost. The second triennium modified the arrangements of the first by, inter alia, adopting anticipated revenue shares to weight the sum of price changes. The efficiency properties of these specific forms of price caps are analysed in the light of existing theory, and the properties of the form of the second triennium price cap are derived. In particular, the set of feasible prices under the second triennium cap depends on the structure of demands. Consequently, the forms of the first and second triennium price caps are identical only in a special case, and in more general circumstances the anticipated revenue-based price cap can leave the firm either more tightly or loosely constrained than under the past revenue-based cap. Sufficient conditions for these cases are described, along with their efficiency consequences, and the generalisations to account for two-part prices and multi-period profit maximisation are considered. The arrangements for, and changes in prices during, the two triennia are assessed in the light of available empirical evidence and the theoretical analysis. Changes in relative prices are consistent with the predictions of the models of the price caps, and with a priori expectations of a more efficient structure. The indexation factors used in both triennia were set too low, and larger rates could have been set to pass the benefits of decreases in costs on to consumers as lower tariffs. The generally inelastic nature of demands for telecommunications services means the second triennium cap imposed a tighter constraint on regulated prices than would a similarly indexed version of the first triennium cap. However, it is not clear that price cap applied in the second triennium will necessarily lead to improvements in the efficiency of regulated prices compared with those which may have been achieved by continuing the arrangements of the first triennium.

Research Doctorate - Doctor of Philosophy (PhD)
The aim of this thesis is to conduct a thorough analysis of the performance of Australian banks over a long period of time, covering a period of various regulatory measures. To achieve this aim, the following four objectives are set in this thesis: first, to investigate economic efficiency (i.e. cost and profit efficiency) of the Australian banks before and after the implementation of the prudential regulation; second, to examine whether the Australian banks operate at the minimum efficient scale; third, to assess whether the efficiencies achieved contribute to wealth maximization of shareholders; fourth, to examine the determinants of Australian bank efficiency. Using a data set covering a period from 1985 through 2008, I first apply the stochastic frontier analysis (SFA) to examine the technical, cost and profit efficiency of Australian banks. A standard data envelopment analysis (DEA), as well as a slack-based DEA model (Tone 2001), is then used to assess the technical and scale efficiency of Australian banks. In addition, a Malmquist index model is used to investigate bank productivity changes over the sample period. The relationship between bank efficiency and bank stock returns is also examined using the market model. Lastly, a mixed two-step approach is used to examine efficiency and the determinants of efficiency using panel data from 1988 to 2008 across three countries, namely, Australia, Canada and the U.K.. In the first stage, a common efficiency frontier for banks in three countries is constructed including the environmental factors. The firm-level determinants of efficiency are then investigated by regressing these efficiencies on firm-specific factors. A key finding of this thesis is that, over the period from 1985 through 2008, the technical, cost and profit efficiency of Australian banks improved. However, scale efficiency showed a declining trend, which was mainly due to the scale inefficiency of the big-four banks over the sample period. Australian banks have a high level of cost and profit efficiency, but have a relatively low level of technical efficiency. Technological improvement is found to be the major driving force behind productivity changes of Australian banks, and also has a positive effect on the profit efficiency frontier. It is also observed that technical, cost and profit efficiency have a positive effect on bank stock returns, suggesting that bank efficiency is properly recognized by market participants. Compared to their regional counterparts, the big-four banks have a lower level of technical efficiency, but a higher level of cost efficiency. The low level of technical efficiency of the big-four banks is attributed to scale inefficiency. In comparison, the regional banks can achieve the same level of profit efficiency as that of the big-four banks by devising a better way of transforming inputs into outputs. Australian banks show a superior performance in terms of technical, cost and profit efficiency compared with that of Canadian and U.K. banks. The factors such as intangible assets, loans to deposits ratio and, loans to assets ratio exert a positive influence on technical efficiency. On the other hand, technical efficiency is inversely affected by size, ratio of loan loss provisions to total loans and debt to equity ratio. The findings of this thesis appear to provide justifications for the deregulatory measures and the prudential regulation framework introduced by the Australian regulatory bodies. Australian banks with increased efficiency levels and relatively high capital adequacy ratios demonstrated resilience to external shocks, such as the Asian financial crisis and the subprime mortgage crisis. An investigation of the determinants of bank efficiency suggests that an Australian bank manager has the choice of tuning up either the capital structure or the asset structure to improve efficiency. However, these findings should be interpreted with caution due to the limitations relating to data unavailability and efficiency evaluation techniques.

This chapter explains how the higher level of prosperity attained during the second “golden age” was threatened during the late 1960s and early 1970s. Pressures for a significant restructuring in the economy arose from a boom in mineral production, the onset of Asian industrialization, and a spike in world energy prices. These forces eventually led to the adoption of more outward-oriented policies with respect to trade and capital flows and a more market-oriented approach to the regulation of the domestic economy—policies more akin to those pursued in the nineteenth century. In pursuit of enhanced levels of prosperity, the policy reforms during the 1980s and 1990s were numerous and significant, requiring the abolition or adaptation of some key economic institutions.

The final chapter provides a summing up of the book along with some speculation about the future development in this sector. In doing so it provides a description of some of the main issues that have arisen in the process of reform of the utilities sector. The chapter also raises a number of issues that need to be addressed looking forward, including the escalation in prices of many utilities services, environmental impacts, as well as the problems associated with economic regulation. Finally, this chapter reflects upon the manner in which reform of Australia’s utilities industries has taken place over the past three decades, and the implications this process may have for policy development and future reform more generally.

In this chapter the reform processes relating to the electricity and natural gas markets are examined, beginning with the changes that occurred in the early 1990s and tracking through the first two decades of the new century. In doing so, the influence of international trends are considered, and the various benefits and problems associated with the reform process are discussed in detail. In addition to looking at the structural and ownership changes that occurred during this period, specific attention is given to the manner in which prices for monopoly assets were determined, changes in regulation of electricity pricing for retail customers and the impact of the measures used to promote renewable energy. Related to these various reforms has been the problems that have arisen from the need to ensure security of supply. Additional attention, therefore, is given to an examination of these issues, including the pros and cons of establishing a domestic gas reserve policy.

Horizontal anticompetitive arrangements law has been marked by major legislative turning points. The prohibition upon group boycotts was first weakened and then abolished. Having been amended on two occasions (1990 and 2001) to restrict its field of operation, the coup de grace was administered in 2017 when s 29 was repealed outright. More regulation of other horizontal anticompetitive arrangements followed Australia’s lead in the steady stream of cases involving collusive understandings that have the purpose, effect, or likely effect of substantially lessening or hindering competition in terms of the key prohibition in s 27. The task of separating collusion by consensus from “conscious parallelism” has not proved easy. Cases involving joint ventures and information sharing have seldom come before the courts. In 2017 the law was remodelled so that “price-fixing” was re-cast as “cartel” activity. The substance did not change for cartels of the price-setting variety; bid rigging, market division, and output restriction arrangements had also been caught under the original 1986 wording. Very recently, cartel conduct has been criminalized.

Gas pipelines and networks are subject to multiple regulatory governance arrangements. One regime is economic regulation which is designed to ensure fair access to gas markets and emulate the price pressures of competition in a sector dominated by a few companies. Another regime is technical regulation which is designed to ensure pipeline system integrity is sufficient for the purposes of public safety, environmental protection and physical security of supply. As was highlighted in analysis of the San Bruno pipeline failure, these two regulatory regimes have substantially different orientations towards expenditure on things such as maintenance and inspection which ultimately impact public safety. Drawing on more than 50 interviews, document review and case studies of specific price determinations, we have investigated the extent to which these two regulatory regimes as enacted in Australia may conflict, and particularly whether economic regulation influences long-term public safety outcomes. We also draw on a comparison with how similar regulatory requirements are enacted in the United Kingdom (UK). Analysis shows that the overall orientation towards risk varies between the two regimes. The technical regulatory regime is a typical goal-setting style of risk governance with an overarching requirement that ‘reasonably practicable’ measures are put in place to minimize risk to the public. In contrast, the incentive-based economic regulatory regime requires that expenditure should be ‘efficient’ to warrant inclusion in the determination of acceptable charges to customers. How safety is considered within this remains an open question. Best practice in performance-based safety regimes such as those used in the UK and Australia require that regulators adopt an attitude towards companies based on the principle of ‘trust but verify’ as, generally speaking, all parties aim for the common goal of no accidents. Equally, in jurisdictions that favor prescriptive safety requirements such as the United States (US) the common goal remains. In contrast, stakeholders in the economic regulatory regime have significantly diverse interests; companies seek to maximize their individual financial returns and regulators seek to exert downward price pressures. We argue that these differences in the two regulatory regimes are significant for the management of public safety risk and conclude that minimizing risk to the public from a major pipeline failure would be better served by the economic regulatory regime’s separate consideration of safety-related from other expenditure and informed by the technical regulator’s view of safety.

Freight rail carriers have been continuously challenged to reduce costs and comply with increasingly stringent environmental standards, into a continuously competing and environmentally driven industry. In this context, current availability and relative abundance of clean and low cost non conventional gas reserves have aroused a comprehensive reevaluation of rail industry into fuel option, especially where freight rail are strongly diesel based. Countries in which rail sector is required to play an important role in transport matrix, where fuel expenditures currently accounts for a significant share of operational costs, like Australia, Brazil, United States and other continental countries, can be seen as strong candidates to adopt fuel alternatives to diesel fueled freight railways. Moreover, from an environmental perspective, the use of alternative fuels (like natural gas) for locomotive traction may allow rail freight carriers to comply with emission standards into a less technologically complex and costly way. In this context, liquefied natural gas (LNG) fueled freight locomotives are seen as a strong potential near-term driver for natural gas use in rail sector, with its intrinsic cost and environmental benefits and with the potential to revolutionize rail industry much like the transition from steam to diesel experienced into the fifties, as well as the more recent advent of use of alternating current diesel-electric locomotives. LNG rail fueled approach has been focused on both retrofitting existing locomotive diesel engines, as well as on original manufactured engines. Given the lower polluting potential of natural gas heavy engines, when compared to diesel counterparts, LNG locomotives can be used to comply with increasingly restrictive Particulate Matter (PM) and Nitrogen Oxides (NOx) emission standards with less technological complexity (engine design and aftertreatment hardware) and their intrinsic lower associated costs. Prior to commercial operation of LNG locomotives, there are some technical, operational and economic hurdles that need to be addressed, i.e. : i) locomotive engine and fuel tender car technological maturity and reliability improvement; ii) regulation improvement, basically focused on operational safety and interchange operations; iii) current and long term diesel - gas price differential, a decisive driver, and, finally, iv) LNG infrastructure requirements (fueling facilities, locomotives and tender car specifications). This work involved an extensive research into already published works to present an overview of LNG use in freight rail industry into a technical, operational and economical perspective, followed by a critical evaluation of its potential into some relevant freight rail markets, such as United States, Brazil and Australia, as well as some European non electrified rail freight lines.