Taxes and the Extraction of Exhaustible Resources: Evidence from California Oil Production

Rao, Nirupama

doi:10.2139/ssrn.2211681

Cited by 7 publications

(8 citation statements)

References 27 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Dependent variable: Rao (2011Rao ( ) 1977Rao ( -2008 Well-level monthly production data for California, estimates aggregated over conventional and unconventional wells 0.208-0.261 Ramcharran (2002Ramcharran ( ) 1973Ramcharran ( -1997 Annual data on total US oil production 0.05 (0.02) Dahl and Yücel (1991 Quarterly data on total US oil production. Add controls for production cost, wells drilled, US income and world oil production -0.08 (0.06) Jones (1990 Quarterly data on total US oil production, and average first-purchase price.…”

Section: Conventionalmentioning

confidence: 99%

Supply Flexibility in the Shale Patch: Evidence from North Dakota

2019

View full text Add to dashboard Cite

This paper provides new results to the literature, showing that output flexibility in oil production depends on the extraction technology. In particular, constructing a novel welllevel monthly production data set covering more than 16,000 crude oil wells in North Dakota, we find supply elasticity of shale wells to be positive and in the range of 0.3-0.9, depending on wells and firms characteristics. We find no such responses for conventional wells. We interpret the supply pattern of shale oil wells to be consistent with the Hotelling theory of optimal extraction. These results have far reaching implications for oil prices: as shale producers grow in size and importance, we should expect to see a stabilizing effect on prices.

show abstract

Section: Conventionalmentioning

confidence: 99%

Supply Flexibility in the Shale Patch: Evidence from North Dakota

2019

View full text Add to dashboard Cite

show abstract

“…For wells that always produce, there is no adjustment on the intensive margin, even though firms are able to adjust their pumping rate (see Rao (2010)). It appears that when prices fell in 1998, an unusually large number of marginal wells were shut in, temporarily accelerating the decline.…”

Section: Jan94mentioning

confidence: 99%

Hotelling Under Pressure

Anderson¹,

Kellogg

Salant

2014

View full text Add to dashboard Cite

We show that oil production from existing wells in Texas does not respond to price incentives. Drilling activity and costs, however, do respond strongly to prices. To explain these facts, we reformulate Hotelling's (1931) classic model of exhaustible resource extraction as a drilling problem: firms choose when to drill, but production from existing wells is constrained by reservoir pressure, which decays as oil is extracted. The model implies a modified Hotelling rule for drilling revenues net of costs and explains why production is typically constrained. It also rationalizes regional production peaks and observed patterns of price expectations following demand shocks.

show abstract

“…Although parameterized with industry data, simulations are distinct from observing behavioral responses to an exogenous change in taxation. The only empirical study, Rao (2010), finds that energy firms respond on the intensive margin, with a 1 percent increase in the after-tax price of oil in California reducing oil production by about 0.25 percent.…”

Section: Taxing or Regulating Externalitiesmentioning

confidence: 99%

When Externalities Are Taxed: The Effects and Incidence of Pennsylvania’s Impact Fee on Shale Gas Wells

Black¹,

McCoy²,

Weber³

2018

Journal of the Association of Environmental and Resource Econom

View full text Add to dashboard Cite

To pay for environmental and public infrastructure costs associated with shale gas wells, Pennsylvania introduced a per-well Impact Fee despite concerns that it would discourage industry investment. Using a quasi-experimental design and data that nearly cover the universe of leases and wells in Pennsylvania, Ohio, and West Virginia, we find that leasing by energy firms declined dramatically after the Fee's enactment, but little to no declines in well permitting or drilling occurred in the most geologically similar subsample. We estimate that at least 60 percent of the decline in leasing reflects a liquidity-crunch linked to retroactive application of the Fee in a time of low natural gas prices. We also observe limited pass-through of the Fee to resource owners. Firms could not change the terms of leases signed before the Fee, and only half of the Fee was passed through in new leases, primarily through a lower royalty rate.

show abstract

Taxes and the Extraction of Exhaustible Resources: Evidence from California Oil Production

Cited by 7 publications

References 27 publications

Supply Flexibility in the Shale Patch: Evidence from North Dakota

Supply Flexibility in the Shale Patch: Evidence from North Dakota

Hotelling Under Pressure

When Externalities Are Taxed: The Effects and Incidence of Pennsylvania’s Impact Fee on Shale Gas Wells

Contact Info

Product

Resources

About