The Impact of Federal Motor Carrier Safety Regulation Waiver on Fuel Price Stabilization after Hurricane Harvey in Texas and Louisiana

Emergency declarations by the president, state governors, or the Federal Motor Carrier Safety Administration (FMCSA), temporarily suspend certain federal safety regulations. Drivers that provide "direct assistance" to an "emergency" are exempt from applicable safety regulations such as hours of service limitations on their route to the emergency. Policymakers expect that the FMCSA temporary safety regulation waivers can facilitate the supply of essential items such as fuel and food in the aftermath of disasters. Particularly, fuel supply is critical for transporting people and goods to accelerate disaster recovery. Despite the significant volume of qualitative discussions on the FMCSA safety regulations, the impact of the waiver on fuel price stabilization in the post-disaster recovery process has not been elucidated. The current research examines whether the FMCSA safety regulation waiver following Hurricane Harvey in August 2017 impacted the daily fuel prices in South Texas and Louisiana. We estimated the pre- and post-differential in the regional fuel prices while controlling for the disaster effect and other factors for South Texas and Louisiana, separately. The results show that the post-disaster FMCSA regulation waiver had a statistically significant impact on regional fuel price stabilization, decreasing the daily fuel prices in South Texas and Louisiana in the aftermath of Hurricane Harvey. While the fuel prices increased by 3.74% in South Louisiana after Hurricane Harvey, the regulation waiver decreased the daily fuel prices by 2.65% and 3.47% in South Texas and Louisiana, respectively. Also, the current study investigated the short-run relationships between regional fuel prices and their key determinants. The findings are expected to assist policymakers and decision-makers in understanding the FMCSA safety regulation waiver's impact on post-disaster fuel prices for enhancing their recovery strategies and policies.