Cutting Costs or Cutting Corners: Asset Reallocation in Oil and Gas Production

Sarah C. Armitage, Judson Boomhower and Catherine Hausman

No 34961, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Asset transfers can lead to efficiency gains but can also reflect distortions from rent-seeking. We examine the link between asset transfers and rent-seeking enabled by differences in environmental liability costs. Focusing on US oil and gas, we develop a conceptual framework in which firms can avoid environmental liabilities through asset transfers. Using a novel dataset, we show that oil and gas wells are transferred frequently, particularly low-revenue wells. Low-revenue wells are also especially likely to be transferred to lower-revenue firms. Transferred wells produce similar amounts in later years but are less likely to be plugged—posing environmental risk.

JEL-codes: G33 G34 L25 L71 Q35 Q40 Q58 (search for similar items in EconPapers)
Date: 2026-03
New Economics Papers: this item is included in nep-bec, nep-ene and nep-env
Note: EEE IO LE
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