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Information and Bidding Behavior by Major Oil Companies for Outer Continental Shelf Leases: Is the joint Bidding Ban Justified?

Steven W. Millsaps, Mack Ott

Year: 1981
Volume: Volume 2
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol2-No3-6
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Abstract:
The Energy Policy and Conservation Act (PL 94-163), signed into law in December 1975, forbade oil companies that produced the equivalent of 1.6 million barrels of oil per day (mbd) worldwide from bidding jointly for outer continental shelf (OCS) leases. The U.S. Department of the Interior adopted regulations to that effect. The Outer Continental Shelf Lands Act Amendment of 1978 (PL 95-372) modified the 1975 law. This amendment gives the Secretary of the Interior the power to conduct periodic reviews of production rates by petroleumproducers and to ban from joint bidding any person or firm that produced, during a prior six-month period specified by the secretary, an average of 1.6 mbd.



The Cost of OCS Bid Rejection

Paul R. Kobrin

Year: 1986
Volume: Volume 7
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol7-No1-6
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Abstract:
The U.S. Interior Department periodically offers Outer Continental Shelf (OCS) tracts for lease at seated bid auction. The bid variable typically is the bonus, a sum paid by the lessee at commencement of the lease. A tract is awarded only to the high bidder. However, the seller often deems even the high bid insufficient, rejecting it and withholding the tract for possible laterauction.



Falling Oil Prices: Where Is the Floor?

James M. Griffin and Clifton T. Jones

Year: 1986
Volume: Volume 7
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol7-No4-2
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Abstract:
The recent precipitous decline in world oil prices from $28 per barrel in November 1985 to $12 per barrel in March 1986 has perplexed most industry analysts and OPEC watchers. As oil prices continue to deteriorate, the central question now seems to be: "Is there a price floor below which oil prices will not fall; and if so, where is it?" Economic theory would suggest that at some price level, short-run marginal extraction costs of oil will eventually exceed marginal revenues from that production, leading to the widespread abandonment of the relatively higher-cost oil wells currently operated by competitive producers in non-OPEC areas. Presumably, once the price of oil falls to this floor, massive production cutbacks in high-cost, non-OPEC areas due to abandonment and reductions in new drilling activity would enable the lower-cost OPEC producers to significantly expand their market shares, thereby eliminating any incentives for further price reductions.





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