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Understanding oil scarcity through drilling activity

Yiyi Bai and Samuel Okullo ()

Energy Economics, 2018, vol. 69, issue C, 261-269

Abstract: There are two dimensions of scarcity for exhaustible resources: physical and economic. While there is a general consensus that oil has grown physically scarce overtime, it is less clear whether the same can be said of economic scarcity. We develop a procedure based on evaluating movements in both drilling trends and rents in order to draw more precise inference about economic availability of oil reserves. We apply this method to data on the US oil industry and demonstrate that US crude oil reserves grew economically more abundant between 1955 and 2002, despite increasing physical scarcity.

Keywords: Oil scarcity; Drilling; United States (search for similar items in EconPapers)
JEL-codes: Q31 Q35 (search for similar items in EconPapers)
Date: 2018
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Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

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