Carbon Taxes and the Petroleum Wealth
AbstractThe aim of this paper is to examine the impacts of a global carbon tax on fossil fuel markets. In particular, the effect on the Norwegian, as well as the global, petroleum wealth is studied. Most empirical models of fossil fuel markets either use an exogenous price path, or model the supply side as being independent of future expectations. Hence, they are not able to test how the exhaustibility feature of fossil fuels affects the sharing of the tax burden between producers and consumers. We study a simple, dynamic model of a competitive fossil fuel market, and we first derive some general theoretical results regarding how a carbon tax may affect the producer and consumer prices. Then, simulations of the global oil market indicate that a fixed carbon tax of e.g. $10/barrel of oil may reduce the petroleum wealth of the average oil producer by 33-42%. The Norwegian petroleum wealth may decrease more than this, by 47-68%. The latter reduction may correspond to a yearly income loss of about 3% of Norwegian GDP. However, the figures should only be considered as very rough estimates, because of the simplistic nature of the model.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Research Department of Statistics Norway in its series Discussion Papers with number 128.
Date of creation: Nov 1994
Date of revision:
Carbon Taxes; Exhaustible Resources; Petroleum Wealth;
Find related papers by JEL classification:
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
- Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (J Bruusgaard).
If references are entirely missing, you can add them using this form.