IDEAS home Printed from https://ideas.repec.org/a/aea/aejpol/v10y2018i4p268-301.html
   My bibliography  Save this article

Taxes and US Oil Production: Evidence from California and the Windfall Profit Tax

Author

Listed:
  • Nirupama L. Rao

Abstract

The recent boom in U.S. oil production has prompted debates on levying new taxes on oil. This paper uses new well-level production data and price variation from federal oil taxes and price controls to assess how taxes affected production. After-tax price elasticity estimates range between 0.295 (0.038) and 0.371 (0.025). Response along the shut-in margin is minimal. There is no evidence of spatial shifting of production to minimize tax liabilities. Taken together the results suggest that taxes reduced domestic production in the 1980s, and the response largely came from wells that continued to pump oil, but at a reduced rate.

Suggested Citation

  • Nirupama L. Rao, 2018. "Taxes and US Oil Production: Evidence from California and the Windfall Profit Tax," American Economic Journal: Economic Policy, American Economic Association, vol. 10(4), pages 268-301, November.
    • Handle: RePEc:aea:aejpol:v:10:y:2018:i:4:p:268-301
    Note: DOI: 10.1257/pol.20140483
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/doi/10.1257/pol.20140483
    Download Restriction: no
    File URL: https://www.aeaweb.org/content/file?id=8307
    Download Restriction: no
    File URL: https://www.aeaweb.org/articles/attachments?retrieve=GCn5Ux2Euh_-Yw0D7jcmbQjD8wzFKOBu
    Download Restriction: no
    File URL: https://www.aeaweb.org/articles/attachments?retrieve=XEIEVK3XXNoFwkfZxfBT-FKdRH7l7vIe
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Daniel Raimi & Emily Grubert & Jake Higdon & Gilbert Metcalf & Sophie Pesek & Devyani Singh, 2023. "The Fiscal Implications of the US Transition Away from Fossil Fuels," Review of Environmental Economics and Policy, University of Chicago Press, vol. 17(2), pages 295-315.
    2. Sun, Xiaohua & Ren, Junlin & Wang, Yun, 2022. "The impact of resource taxation on resource curse: Evidence from Chinese resource tax policy," Resources Policy, Elsevier, vol. 78(C).
    3. Brown, Jason P. & Maniloff, Peter & Manning, Dale T., 2020. "Spatially variable taxation and resource extraction: The impact of state oil taxes on drilling in the US," Journal of Environmental Economics and Management, Elsevier, vol. 103(C).
    4. De Vito, Antonio & Pancotto, Livia & Perdichizzi, Salvatore & Reghezza, Alessio, 2023. "Don’t go on holiday in August! Market reaction to an unexpected windfall tax on banks," Economics Letters, Elsevier, vol. 233(C).
    5. repec:bny:wpaper:0104 is not listed on IDEAS
    6. Abdul-Salam, Yakubu, 2024. "Examining the effect of the UK oil and gas windfall tax on the economics of new fields in the UKCS province," Resources Policy, Elsevier, vol. 88(C).
    7. repec:bny:wpaper:0107 is not listed on IDEAS

    More about this item

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • L78 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Government Policy
    • Q35 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Hydrocarbon Resources
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aejpol:v:10:y:2018:i:4:p:268-301. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.