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The Role of Information in U.S. Offshore Oil and Gas Lease Auctions

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  • Robert H. Porter

Abstract

This paper describes the U.S. offshore oil and gas lease sales, conducted by the Department of the Interior since 1954. Several decision problems are discussed, including bidding for leases, the government's decision whether to accept the highest bid, the incidence and timing of exploratory drilling, and the formation of bidding consortia. It is argued that equilibrium models that emphasize informational and strategic issues, and that account for institutional features of the leasing program, provide accurate predictions of outcomes.

Suggested Citation

  • Robert H. Porter, 1992. "The Role of Information in U.S. Offshore Oil and Gas Lease Auctions," NBER Working Papers 4185, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:4185 Note: IO
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    1. Mark Gertler & R. Glenn Hubbard & Anil Kashyap, 1991. "Interest Rate Spreads, Credit Constraints, and Investment Fluctuations: An Empirical Investigation," NBER Chapters,in: Financial Markets and Financial Crises, pages 11-32 National Bureau of Economic Research, Inc.
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    4. Porter, Robert H & Zona, J Douglas, 1993. "Detection of Bid Rigging in Procurement Auctions," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 518-538, June.
    5. Paarsch, H.J., 1992. "Empirical Models of Auctions and an Application to British Columbian Timber Sales," UWO Department of Economics Working Papers 9212, University of Western Ontario, Department of Economics.
    6. Hendricks, Kenneth & Porter, Robert H, 1988. "An Empirical Study of an Auction with Asymmetric Information," American Economic Review, American Economic Association, vol. 78(5), pages 865-883, December.
    7. Hansen, Robert G, 1986. "Sealed-Bid versus Open Auctions: The Evidence," Economic Inquiry, Western Economic Association International, vol. 24(1), pages 125-142, January.
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    9. Laffont, Jean-Jacques & Ossard, Herve & Vuong, Quang, 1995. "Econometrics of First-Price Auctions," Econometrica, Econometric Society, vol. 63(4), pages 953-980, July.
    10. Hendricks, Kenneth & Porter, Robert H & Spady, Richard H, 1989. "Random Reservation Prices and Bidding Behavior in OCS Drainage Auctions," Journal of Law and Economics, University of Chicago Press, vol. 32(2), pages 83-106, October.
    11. Libecap, Gary D & Wiggins, Steven N, 1985. "The Influence of Private Contractual Failure on Regulation: The Case of Oil Field Unitization," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 690-714, August.
    12. Hendricks, Kenneth & Porter, Robert H & Wilson, Charles A, 1994. "Auctions for Oil and Gas Leases with an Informed Bidder and a Random Reservation Price," Econometrica, Econometric Society, vol. 62(6), pages 1415-1444, November.
    13. Kenneth Hendricks & Dan Kovenock, 1989. "Asymmetric Information, Information Externalities, and Efficiency: The Case of Oil Exploration," RAND Journal of Economics, The RAND Corporation, pages 164-182.
    14. Hendricks, Kenneth & Porter, Robert H & Boudreau, Bryan, 1987. "Information, Returns, and Bidding Behavior in OCS Auctions: 1954-1969," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 517-542, June.
    15. McAfee, R Preston & McMillan, John, 1987. "Auctions and Bidding," Journal of Economic Literature, American Economic Association, pages 699-738.
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