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The Economic and Environmental Consequences of the Petroleum Industry Extensive Margin

Author

Listed:
  • Giacomo Benini

    (Department of Business and Management Science, NHH)

  • Adam Brandt

    (Department of Energy Resource Engineering, Stanford University)

  • Valerio Dotti

    (Department of Economics, University Of Venice CÃ Foscari)

  • Hassan El-Houjeiri

    (Technology Outlook, Strategy & Planning Dept., Saudi Aramco)

Abstract

The recent diffusion of novel oil technologies has increased the variability of petroleum resources. Today, it is possible to mine oil sands, to extract liquids from tight rocks, and to produce high-viscosity oils. Merging accounting and environmental data, we quantify the upstream emissions of the least profitable oilfields. According to our estimates thirteen fields, responsible for the production of 0.72 million barrels per day, represent the 1% extensive margin of the industry. These formations are Heavy & Extra Heavy and Sands deposits. Their average upstream carbon intensity is 114.61 KgCO2e per barrel versus a global average of 54.35. Similar results are obtained widening the extensive margin to 2.5% and 5%. This finding suggests that a fall in the global oil demand of 1% can reduce upstream emissions by 24.95 MMtCO2e per year, the annual footprint of 5.3% of all the cars registered in the United States.

Suggested Citation

  • Giacomo Benini & Adam Brandt & Valerio Dotti & Hassan El-Houjeiri, 2023. "The Economic and Environmental Consequences of the Petroleum Industry Extensive Margin," Working Papers 2023:14, Department of Economics, University of Venice "Ca' Foscari".
    • Handle: RePEc:ven:wpaper:2023:14
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Oil Economics; Shadow Prices; Empirical Analysis of Firm Behavior; Panel Data; Co-integration; Endogeneity; Linear Mixed Models;
    All these keywords.

    JEL classification:

    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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