Hotelling under Pressure

Anderson, Soren T.; Kellogg, Ryan; Salant, Stephen W.

doi:10.1086/697203

Cited by 192 publications

(178 citation statements)

References 41 publications

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“…From this we see that the point estimate of the response for all wells to a percentage change in the spot price of oil at time t is positive at .055, nearly identical to the short term supply response found in Anderson et al (2014) for aggregate oil production in Texas. It is, however, small in magnitude, only significant at the 10 percent level, and thus echoes the results in the literature that short-term supply elasticity for conventional oil wells is near zero.…”

Section: Short Term Supply Elasticitysupporting

confidence: 61%

“…Previous studies for conventional producers have not found this flexibility condition to hold, see e.g. Anderson et al (2014) that found the price elasticity of oil suppliers in Texas to be zero. Our empirical results, however, show that the degree of output flexibility depends on the technology applied, and that firms using shale oil technology are much more flexible in allocating output intertemporally.…”

Section: Introductionmentioning

confidence: 87%

“…Hogan (1989), Pesaran (1990), Dahl and Yücel (1991), Ramcharran (2002), Smith (2009), Griffin and Teece (2016) and Anderson et al (2014). However, these studies analyse output responses from conventional oil pools only, mainly using aggregate data.…”

Section: Introductionmentioning

confidence: 99%

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Supply Flexibility in the Shale Patch: Evidence from North Dakota

2017

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We analyse if supply flexibility in oil production depends on the extraction technology. In particular, we ask to what extent shale oil producers respond to price incentives by changing completion of new wells as well as oil production from completed wells. Using a novel well-level monthly production data set covering more than 15,000 crude oil wells in North Dakota, we find large differences in response between conventional and unconventional (shale) extraction technology: While shale oil wells respond significantly to spot future spreads by changing both well completion and crude oil production, conventional wells do not. Our results suggest that firms using shale oil technology are more flexible in allocating output intertemporally. We interpret such output pattern of shale oil wells to be consistent with the Hotelling theory of optimal extraction. JEL-codes: C33, L71, Q31, Q40

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Section: Short Term Supply Elasticitysupporting

confidence: 61%

Section: Introductionmentioning

confidence: 87%

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Supply Flexibility in the Shale Patch: Evidence from North Dakota

2017

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“…As stressed by Anderson, Kellogg and Salant (2014), it is simply suboptimal for oil producers to reduce oil production from existing wells, given the cost structure of the oil industry and geological constraints on oil extraction. Anderson et al provide evidence that even in competitive markets oil production from existing wells need not respond to shocks to spot and expected future oil prices.…”

Section: Implications For Oil Producersmentioning

confidence: 99%

Understanding the Decline in the Price of Oil since June 2014

Baumeister¹,

Kilian²

2016

Journal of the Association of Environmental and Resource Econom

192

153

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“…Even though the empirical validation of the Hotelling-framework is mixed (Livernois 2008), Anderson et al (2014) show that using the drilling instead of the extraction decision matches the data on oil extraction quite well. This provides evidence that the intertemporal arbitrage condition inherent in the Hotelling framework is still applicable.…”

Section: Introductionmentioning

confidence: 99%

Does the Adverse Announcement Effect of Climate Policy Matter? — A Dynamic General Equilibrium Analysis

Riekhof

Bröcker

2017

Clim. Change Econ.

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractWe consider a carbon emissions tax announced today, but implemented after a known time-lag. Before implementation, the announcement induces higher emissions than without intervention. In welfare terms, this adverse announcement effect could more than outweigh the gain after tax implementation. We quantify a 'critical lag' such that a shorter (longer) implementation lag is a welfare gain (loss) over nointervention. We identify resource scarcity as the main driver for a short critical lag. The model is a global Ramsey Model extended by an exhaustible carbon resource and linked to a climate model.

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Hotelling under Pressure

Cited by 192 publications

References 41 publications

Supply Flexibility in the Shale Patch: Evidence from North Dakota

Supply Flexibility in the Shale Patch: Evidence from North Dakota

Understanding the Decline in the Price of Oil since June 2014

Does the Adverse Announcement Effect of Climate Policy Matter? — A Dynamic General Equilibrium Analysis

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