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Understanding oil scarcity through drilling activity

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  • Bai, Yiyi
  • Okullo, Samuel J.

Abstract

There are two dimensions of scarcity for exhaustible resources: physical and economic. While there is a general consensus that oil has grown physically scarce overtime, it is less clear whether the same can be said of economic scarcity. We develop a procedure based on evaluating movements in both drilling trends and rents in order to draw more precise inference about economic availability of oil reserves. We apply this method to data on the US oil industry and demonstrate that US crude oil reserves grew economically more abundant between 1955 and 2002, despite increasing physical scarcity.

Suggested Citation

  • Bai, Yiyi & Okullo, Samuel J., 2018. "Understanding oil scarcity through drilling activity," Energy Economics, Elsevier, vol. 69(C), pages 261-269.
    • Handle: RePEc:eee:eneeco:v:69:y:2018:i:c:p:261-269
    DOI: 10.1016/j.eneco.2017.12.003
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    Cited by:

    1. Okullo, Samuel J. & Reynès, Frédéric & Hofkes, Marjan W., 2021. "(Bio-)Fuel mandating and the green paradox," Energy Economics, Elsevier, vol. 95(C).
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    3. van den Bijgaart, Inge & Rodriguez, Mauricio, 2020. "Closing wells; fossil exploration and abandonment in the energy transition," Working Papers in Economics 789, University of Gothenburg, Department of Economics.
    4. Chuku Chuku & Lin Lang & King Yoong Lim, 2021. "Working Paper 355 - Public debt, Chinese loans and optimal exploration-extraction in Africa," Working Paper Series 2481, African Development Bank.

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    More about this item

    Keywords

    Oil scarcity; Drilling; United States;
    All these keywords.

    JEL classification:

    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • Q35 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Hydrocarbon Resources

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