 How do oil producers respond to giant oil field discoveries?Energy Economics, 2019, vol. 80, issue C, 59-74 Abstract: The classical Hotelling model predicts that the optimal extraction level rises immediately after an unexpected resource discovery, whereas, in reality, there are substantial adjustment costs in petroleum production and an average lag of several years between a discovery and the start of production. Using a large panel of country-level production data and a difference-in-differences identification approach, I show that domestic production levels respond before a newly found oil field comes on line and that this increase is driven by non-OPEC producers, consistent with different responses of OPEC and non-OPEC drilling activity. Offshore fields and exceptionally large “super-” or “mega-giant” fields are also more likely to raise country-level production. Given that domestic petroleum consumption rises by less in response to a discovery, at least part of the increase in production seems to go into (net) oil exports. Keywords: Giant oil field discoveries; Lifetime of reserves; Oil production; OPEC; Proved reserves (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:80:y:2019:i:c:p:59-74 DOI: 10.1016/j.eneco.2018.12.012 Access Statistics for this article Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant More articles in Energy Economics from Elsevier |
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