IDEAS home Printed from https://ideas.repec.org/a/sae/enejou/v22y2001i1p27-49.html
   My bibliography  Save this article

Oil Production in the Lower 48 States: Economic, Geological, and Institutional Determinants

Author

Listed:
  • Robert K. Kaufmann
  • Cutler J. Cleveland

Abstract

In this paper, we establish an empirical model for oil production in the lower 48 states that represents its economic, physical, and institutional determinants. We estimate a vector error correction model for oil production in the lower 48 states that specifies real oil prices, average production costs, and prorationing by the Texas Railroad Commission. These modifications enable us to generate a model that accounts for most of the variation in oil production in the lower 48 states between 1938 and 1991. The result that oil production in the lower 48 states shares stochastic trends with real oil prices, average production costs, and prorationing indicates that accuracy of Hubbert's bell shaped curve is fortuitous. The importance of these factors also indicates why the basic Hotelling model cannot replicate the production path for oil in the lower 48 states. This inability is critical. The negative economic effects associated with high prices and energy shortages imply that the importance of inconsistencies with the basic Hotelling model identified by this analysis may be sufficient to warrant a greater degree of government intervention in the transition from oil than is currently envisioned by most policy makers.

Suggested Citation

  • Robert K. Kaufmann & Cutler J. Cleveland, 2001. "Oil Production in the Lower 48 States: Economic, Geological, and Institutional Determinants," The Energy Journal, , vol. 22(1), pages 27-49, January.
    • Handle: RePEc:sae:enejou:v:22:y:2001:i:1:p:27-49
    DOI: 10.5547/ISSN0195-6574-EJ-Vol22-No1-2
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.5547/ISSN0195-6574-EJ-Vol22-No1-2
    Download Restriction: no
    File URL: https://libkey.io/10.5547/ISSN0195-6574-EJ-Vol22-No1-2?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Kim, Kiwhan & Schmidt, Peter, 1990. "Some evidence on the accuracy of Phillips-Perron tests using alternative estimates of nuisance parameters," Economics Letters, Elsevier, vol. 34(4), pages 345-350, December.
    2. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    3. Rudolf Wolffram, 1971. "Positivistic Measures of Aggregate Supply Elasticities: Some New Approaches—Some Critical Notes," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 53(2), pages 356-359.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. David I. Stern & Robert K. Kaufmann, 1997. "Time series properties of global climate variables: detection and attribution of climate change," Working Papers in Ecological Economics 9702, Australian National University, Centre for Resource and Environmental Studies, Ecological Economics Program.
    2. Mohammad J Alam & Raghbendra Jha, 2016. "Asymmetric threshold vertical price transmission in wheat and flour markets in Dhaka (Bangladesh): seemingly unrelated regression analysis," ASARC Working Papers 2016-03, The Australian National University, Australia South Asia Research Centre.
    3. Sun, Changyou, 2011. "Price dynamics in the import wooden bed market of the United States," Forest Policy and Economics, Elsevier, vol. 13(6), pages 479-487, July.
    4. Teresa Serra & Barry Goodwin, 2003. "Price transmission and asymmetric adjustment in the Spanish dairy sector," Applied Economics, Taylor & Francis Journals, vol. 35(18), pages 1889-1899.
    5. Oral Capps & Pablo Sherwell, 2007. "Alternative approaches in detecting asymmetry in farm-retail price transmission of fluid milk," Agribusiness, John Wiley & Sons, Ltd., vol. 23(3), pages 313-331.
    6. Titus O. Awokuse & Xiaohong Wang, 2009. "Threshold Effects and Asymmetric Price Adjustments in U.S. Dairy Markets," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 57(2), pages 269-286, June.
    7. Ankamah-Yeboah, Isaac, 2012. "Spatial Price Transmission in the Regional Maize Markets in Ghana," MPRA Paper 49720, University Library of Munich, Germany.
    8. Emeka Nkoro & Aham Kelvin Uko, 2016. "Exchange Rate and Inflation Volatility and Stock Prices Volatility: Evidence from Nigeria, 1986-2012," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 6(6), pages 1-4.
    9. Czujack, Corinna & Flôres Junior, Renato Galvão & Ginsburgh, Victor, 1995. "On long-run price comovements between paintings and prints," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 269, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    10. Bruce Morley, 2009. "A Comparison of Two Alternative Monetary Approaches to Exchange Rate Determination over the Long-Run," International Econometric Review (IER), Econometric Research Association, vol. 1(2), pages 63-76, April.
    11. Bloch, Harry & Rafiq, Shuddhasattwa & Salim, Ruhul, 2015. "Economic growth with coal, oil and renewable energy consumption in China: Prospects for fuel substitution," Economic Modelling, Elsevier, vol. 44(C), pages 104-115.
    12. Gevorkyan, Arkady & Semmler, Willi, 2016. "Oil price, overleveraging and shakeout in the shale energy sector — Game changers in the oil industry," Economic Modelling, Elsevier, vol. 54(C), pages 244-259.
    13. Levent, Korap, 2007. "Modeling purchasing power parity using co-integration: evidence from Turkey," MPRA Paper 19584, University Library of Munich, Germany.
    14. Michel DIMOU & Alexandra SCHAFFAR & Zhihong CHEN & Shihe FU, 2008. "LA CROISSANCE URBAINE CHINOISE RECONSIDeReE," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 27, pages 109-131.
    15. Md.Yousuf & Raju Ahmed & Nasrin Akther Lubna & Shah Md. Sumon, 2019. "Estimating the Services Sector Impact on Economic Growth of Bangladesh: An Econometric Investigation," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 7(2), pages 62-72, June.
    16. Jason Allen & Robert Amano & David P. Byrne & Allan W. Gregory, 2009. "Canadian city housing prices and urban market segmentation," Canadian Journal of Economics, Canadian Economics Association, vol. 42(3), pages 1132-1149, August.
    17. Vassilis Monastiriotis & Cigdem Borke Tunali, 2020. "The Sustainability of External Imbalances in the European Periphery," Open Economies Review, Springer, vol. 31(2), pages 273-294, April.
    18. Kim, Byung Yeon, 1997. "Soviet Household Saving Function," Economic Change and Restructuring, Springer, vol. 30(2-3), pages 181-203.
    19. Muellbauer, John & Sinclair, Peter & Aron, Janine & Farrell, Greg, 2010. "Exchange Rate Pass-through and Monetary Policy in South Africa," CEPR Discussion Papers 8153, C.E.P.R. Discussion Papers.
    20. Zamani, Mehrzad, 2007. "Energy consumption and economic activities in Iran," Energy Economics, Elsevier, vol. 29(6), pages 1135-1140, November.

    More about this item

    Keywords

    oil production; US; empirical model; oil prices; Hotelling model; Hubbert curve; oil policy;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:enejou:v:22:y:2001:i:1:p:27-49. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.