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Equity, Commodity, and Distillate Risk for Oil Upstream Producers and Downstream Consumers

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  • Scott Alan Carson
  • Scott A. Carson

Abstract

The oil and gas industry’s role in economic activity is hard to overstate. This study considers upstream, midstream, and downstream oil producer returns and risk compared to downstream oil consumers in airlines, ground-freight, railroads, and tire manufacturing. Between 2000 and 2020, the oil and gas industry had the lowest expected returns, greater risk, and only Integrated producer returns approached downstream oil and gas consumer risk-return profiles. Railroad companies were the least risky with the highest returns, followed by tire manufacturers, airlines, and freight companies. Equity, commodity, and distillate markets positively price risk into oil and gas producer returns, and upstream producers had greater project and equity market risk than downstream consumers. Most downstream oil consumer equity returns are positively related to equity and commodity market risk, while a few downstream commercial consumers have negative equity and commodity return variation, indicating that crude oil is an input to downstream consumers.

Suggested Citation

  • Scott Alan Carson & Scott A. Carson, 2023. "Equity, Commodity, and Distillate Risk for Oil Upstream Producers and Downstream Consumers," CESifo Working Paper Series 10426, CESifo.
    • Handle: RePEc:ces:ceswps:_10426
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp10426.pdf
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    References listed on IDEAS

    as
    1. Carson, Scott Alan, 2020. "United States oil and gas stock returns with multi-factor pricing models: 2008–2018," The North American Journal of Economics and Finance, Elsevier, vol. 54(C).
    2. Carson, Scott Alan, 2020. "United States oil and gas stock returns with multi-factor pricing models: 2008-2018," Munich Reprints in Economics 84754, University of Munich, Department of Economics.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    oil and gas; air transportation; ground freight; railroads; tire manufacturing;
    All these keywords.

    JEL classification:

    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation

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