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The Impact of Changes in Crude Oil Prices and Offshore Oil Production on the Economic Performance of U.S. Coastal Gulf States

Abstract:
This paper investigates the effects of changes in crude oil prices and offshore oil and gas production on the economic performance of U.S. Coastal Gulf States Texas, Louisiana, Alabama and Mississippi. The empirical results do not provide statistical evidence to reject the hypothesis that positive shocks to oil and gas prices and production variation increase the economic performance of these coastal Gulf States. However, the magnitude of the response to changes in prices varies across the states. In addition, the empirical results show significant differences in the duration of the lingering economic effects of price shocks and changes in production among the states. The duration varies depending upon whether the state is a net petroleum exporter or net importer, and whether the state has a diversified economic base or structure.

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Energy Specializations: Petroleum – Exploration and Production; Petroleum – Markets and Prices for Crude Oil and Products

JEL Codes:
D24 - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
L13 - Oligopoly and Other Imperfect Markets

Keywords: Oil exploration, US Gulf of Mexico, VAR model, oil prices

DOI: 10.5547/ISSN0195-6574-EJ-Vol25-No2-5


Published in Volume 25, Number 2 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.