How do unanticipated discoveries of oil fields affect the oil price?
AbstractThe Hotelling rule argues that the price for a nonrenewable resource adjusts to the shadow value of the resource, reflecting the remaining availability of the resource. We empirically test the Hotelling rule on the effect of unanticipated oil field discoveries. We do not find evidence for a significant adjustment of the price of crude oil to news about greater resource availability and therefore conclude that the price for crude oil does not follow the theoretically optimal price path.
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Bibliographic InfoPaper provided by CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich in its series CER-ETH Economics working paper series with number 10/140.
Length: 15 pages
Date of creation: Oct 2010
Date of revision:
Nonrenewable Resource; Oil Price; Exhaustible Resources; Information Acquisition;
Find related papers by JEL classification:
- Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
- Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
- G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-10-23 (All new papers)
- NEP-CWA-2010-10-23 (Central & Western Asia)
- NEP-ENE-2010-10-23 (Energy Economics)
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