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Different behaviors in natural gas production between national and private oil companies: Economics-driven or environment-driven?

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  • Gong, Binlei

Abstract

This paper investigates firm-level efficiency in the petroleum industry during the period 2009–2015. A Jackknife model averaging method and two stochastic frontier models are utilized to estimate the input-output relation more accurately. The derived efficiency is then decomposed to predict the effect of various efficiency determinants with an emphasis on gas ratio and ownership. A significantly negative effect of natural gas ratio (in production portfolio) on efficiency is found for both National Oil Companies (NOCs) and privately-owned International Oil Companies (IOCs). This finding implies that the decline in natural gas ratio for IOCs is economics-driven, and the incline in gas ratio for NOCs is environment-driven. Therefore, the environmental objective is the NOCs’ third non-commercial objective, alongside subsidizing below-market energy prices and offering excessive employment, as found in the literature. Governments may consider the transfer of subsidies from low energy prices to clean energy promotion, which leads to energy saving and emissions reduction.

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  • Gong, Binlei, 2018. "Different behaviors in natural gas production between national and private oil companies: Economics-driven or environment-driven?," Energy Policy, Elsevier, vol. 114(C), pages 145-152.
    • Handle: RePEc:eee:enepol:v:114:y:2018:i:c:p:145-152
    DOI: 10.1016/j.enpol.2017.12.004
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    Cited by:

    1. Gong, Binlei, 2020. "Agricultural productivity convergence in China," China Economic Review, Elsevier, vol. 60(C).
    2. Gong, Binlei, 2018. "Interstate competition in agriculture: Cheer or fear? Evidence from the United States and China," Food Policy, Elsevier, vol. 81(C), pages 37-47.
    3. Al-Mana, Ali A. & Nawaz, Waqas & Kamal, Athar & Koҫ, Muammer, 2020. "Financial and operational efficiencies of national and international oil companies: An empirical investigation," Resources Policy, Elsevier, vol. 68(C).
    4. Binlei Gong & Robin C. Sickles, 2021. "Resource allocation in multi-divisional multi-product firms," Journal of Productivity Analysis, Springer, vol. 55(2), pages 47-70, April.
    5. Binlei Gong & Robin C. Sickles, 2020. "Non-structural and structural models in productivity analysis: study of the British Isles during the 2007–2009 financial crisis," Journal of Productivity Analysis, Springer, vol. 53(2), pages 243-263, April.
    6. Zhang, Tao & Li, Hong-Zhou & Xie, Bai-Chen, 2022. "Have renewables and market-oriented reforms constrained the technical efficiency improvement of China's electric grid utilities?," Energy Economics, Elsevier, vol. 114(C).

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    More about this item

    Keywords

    L71; D24; Q5; L33; O44; Oil and gas companies; Efficiency analysis; Stochastic frontier; Natural gas ratio; Ownership structure;
    All these keywords.

    JEL classification:

    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth

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