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Market Power, International CO2 Taxation and Oil Wealth

Elin Berg, Snorre Kverndokk and Knut Einar Rosendahl

Year: 1997
Volume: Volume18
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol18-No4-2
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We present an intertemporal equilibrium model for fossil fuels, and study the effects on oil prices, extraction paths and oil wealth of an international carbon tax on fossil fuel consumption Our conclusion is that a carbon tax will hurt OPEC more than other producers, as the cartel is induced by its market power to restrain production in order to maintain the oil price. Thus, the effects on the oil wealth of the competitive fringe are minor, while OPECs wealth is considerably reduced. We also show by applying a competitive model that this result is due to market structure, and not to differences in the resource base.

Adelman's Rule and the Petroleum Firm

Robert D. Cairns and Graham A. Davis

Year: 2001
Volume: Volume22
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol22-No3-2
No Abstract

Why Tax Energy? Towards a More Rational Policy

David M. Newbery

Year: 2005
Volume: Volume 26
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol26-No3-1
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The same fuels are taxed at widely different rates in different countrieswhile different fuels are taxed at widely different rates within and across countries. This paper considers what tax theory has to say about efficient energy tax design. The main factors for energy taxes are the optimal tariff argument, the need to correct externalities such as global warming, and second-best considerations for taxing transport fuels as road charges, but these are inadequate to explain current energy taxes. EU energy tax harmonisation and Kyoto suggest that the time is ripe to reform energy taxation.

Prediction and Inference in the Hubbert-Deffeyes Peak Oil Model

John R. Boyce

Year: 2013
Volume: Volume 34
Number: Number 2
DOI: 10.5547/01956574.34.2.4
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The Hubbert-Deffeyes "peak oil" (HDPO) model predicts that world oil production is about to enter a period of sustained decline. This paper investigates the empirical robustness of this claim. I use out-of-sample methods to test whether the HDPO model is capable of estimating ultimately recoverable reserves. HDPO model estimates of ultimately recoverable reserves, based on data available 30 years or more in the past, are found to be less than current observed cumulative production and discoveries. This result is robust to different specifications of the HDPO model, to applications to production and discoveries data, and to various levels of geographical aggregation. These problems stem from an attempt by the HDPO model to force a linear relationship onto data which are inherently nonlinear. This characteristic of the data is present in a wide variety of natural resources. I also show that the HDPO model is incapable of distinguishing between processes for which cumulative production is truly finite and processes for which cumulative production is unbounded. These findings undermine claims that the HDPO model is capable of yielding meaningful measures of ultimately recoverable reserves or of predicting when world oil production might peak.

Natural Gas Supply Behavior under Interventionism: The Case of Argentina

Diego Barril and Fernando Navajas

Year: 2015
Volume: Volume 36
Number: Number 4
DOI: 10.5547/01956574.36.4.dbar
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We address the causes behind the significant drop in natural gas production in the 2000s in Argentina, starting from a basic supply model that depends on economic incentives, and adding control variables related to different potential explanations such as firm specific (or area specific) behavior and the role of contractual renegotiation of concessions extensions. Results from a panel data of production areas between 2003 and 2013 show that once a basic supply-past production (or reserve) relationship is modeled, other often mentioned effects become non-significant. Chiefly among them are firm specific effects that were used as a central argument for the nationalization of YPF in 2012. Rather, the evidence shows that the observed downcycle conforms to the prediction of a simple model of depressed economic incentives acting upon mature conventional natural gas fields and hindering investment in reserve additions or new technologies. The results are robust to the nationalization of YPF, after which aggregate production continued a downward trend for two years, although are insufficient to capture an ongoing reconfiguration of incentives and risks in the forthcoming transition to shale gas production.

Reconciling Hotelling Resource Models with Hotelling's Accounting Method

Robert D. Cairns and John M. Hartwick

Year: 2022
Volume: Volume 43
Number: Number 5
DOI: 10.5547/01956574.43.5.rcai
View Abstract

In green accounting, it is seldom checked that depreciation must sum to original value. A re-examination of green accounting under this condition finds that, in a non-autonomous program, income should include capital gains. Subtle questions respecting the role and treatment of capital gains are brought to light through six models in exhaustible-resource economics. It is likely that there are sources of non-autonomy when a problem is not optimal or when there are non-priced assets—in practice, always. Accordingly, the questions raised strongly influence accounting method.

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