FORECASTING ENERGY SUPPLY AND POLLUTION FROM THE OFFSHORE OIL AND GAS INDUSTRY

Sound energy and environmental policies require reliable forecasts of production and pollution, as well as supply response to policy actions. In this study, we describe a model for forecasting long-term production and pollution in the offshore oil and gas industry in the Gulf of Mexico under different scenarios. A model based on disaggregated field-level data is used to forecast production and pollution through to the year 2050. The time path for resource depletion is determined as the net effect of technological progress and depletion under alternative scenarios for new discoveries. We also quantify potential efficiencies that could result from changing the design of regulations from the current command-and-control regime, to an approach that allows more flexible means of achieving the same environmental goals.Forecasting, energy supply, R&D, technological change, environmental regulations, environmental pollution, offshore oil, gas industry, Resource /Energy Economics and Policy, D24, L71, Q32, Q48,

Ownership Risk, Investment, and the Use of Natural Resources

The effect of insecure ownership on ordinary investment and on the exploitation of natural resources is examined. Insecure ownership is characterized as a positive probability that a typical asset or its future return will be confiscated. For empirical analysis, the probability of confiscation is modeled as a function of observable political attributes of countries, principally the type of government regime in power (democratic versus non-democratic) and the prevalence of political violence or instability. A general index of ownership security is estimated from the political determinants of economy wide investment rates, and then introduced into models of petroleum and forest use. Ownership risk is found to have a significant, and quantitatively important effect. Empirically, increases in ownership risk are associated with reductions in forest cover and with slower rates of petroleum exploration. Contrary to conventional wisdom, greater ownership risk tends to slow rates of petroleum extraction, apparently because the extraction process is capital intensive.

Simultaneous Supplies of Dirty Energy and Capacity Constrained Clean Energy : Is There a Green Paradox?

Marc Gronwald and Luise Roepke gratefully acknowledge financial support by the German Federal Ministry of Education and Research. The authors are indebted to the editors and two anonymous reviewers for their very helpful comments and guidance.Peer reviewedPublisher PD

The effect of opening up ANWR to drilling on the current price of oil

The Effect of Opening up ANWR to Drilling on the Current Price of Oil R. Morris Coats and Gary M. PecquetEveryone knows that oil discovered today, perhaps in the Alaskan National Wildlife Refuge (ANWR), has no effect on prices until that oil hits the market. For instance, on its website, the Democratic Policy Committee, (http://democrats.senate.gov/~dpc/pubs/107-1-72.html) states that “it will require seven to twelve years from approval before there is any oil production from the ANWR area. Therefore, production in ANWR will have no impact on current or short-term gasoline and oil supplies and prices.” While this is something that everyone seems to know, it is a case that the theory held by everyone just happens to be wrong. Since future prices are expected to be lower, future profits are also lower, so the value of oil not produced now, but held for future sales, is lower, making it more profitable to go ahead and produce and sell now instead of waiting for future profits. Using oil now reduces the amount of oil available for the future, which involves the opportunity cost of forgone future profits, which are sometime called the marginal user costs or scarcity rents. In this paper, we use simple two-period models to show that if an amount of newly discovered oil is significant enough to reduce prices in the future, any drop in future prices reduces the future profitability of oil, reducing the marginal user costs of oil now. That reduction in the marginal user costs reduces the current price of oil just as if there were a reduction in the marginal costs of extracting oil now. We explore the effects of the reduction in marginal user costs in the competitive or price-taker case as well as the price-searcher case, where a monopolist or dominant supplier responds to a substantial discovery by another seller, but where the discovery will not contribute to production for some years to come. In both cases, we find that oil that is expected to reach the market at some time in the future has an immediate impact on oil prices. Topic Area: Q4 EnergyANWR; resource discovery; timing of price impact; speculation

Mineral Royalties: Historical Uses and Justifications

Governments and private landowners have collected royalties on mineral resources for centuries. When comprehensive measures to account for the environmental externalities of mineral extraction are politically or practically unavailable, federal and state governments may consider adjusting royalty rates as an expedient way to account for these externalities and benefit society. One key policy question that has not received attention, however, is whether a royalty rate can and should be manipulated in this way, assuming statutory discretion to do so. This article fills that gap by evaluating the argument for increasing federal or state fossil fuel royalty rates through historical, theoretical, and practical lenses. To that end, this article in turn considers the meaning of royalties, the economic justifications for royalties, the legislative history of the implementation of federal royalties, and the considerations that private landowners have relied upon in setting royalties. This article concludes that it would be appropriate for governments to adjust mineral royalty rates to account for negative externalities not otherwise addressed by regulation or to otherwise promote public welfare. Such use of royalties is consistent with the historical record. Royalties have been used as pragmatic policy tools from almost their inception, and federal and state governments have often exercised their existing statutory discretion to adjust mineral royalty rates to promote public welfare

Comparative analysis of vitamin D content in sardines canned in olive oil and water

Vitamin D is a fat-soluble hormone primarily responsible in maintaining plasma calcium and phosphorus homeostasis in humans. Vitamin D insufficiency and deficiency is a global health issue. Very few foods naturally contain vitamin D; a major source is oily fish such as salmon. Several studies have analyzed vitamin D content in various fish, however studies concerning canned fish are lacking. In particular, this study was interested in evaluating the vitamin D content in canned sardines in not only the whole fish but also in the olive oil or water it was canned in. It was hypothesized that the vitamin D content in sardines canned in water would be greater than sardines canned in olive oil due to the fat-soluble nature of vitamin D to be more easily extracted into olive oil than water. Sardines (~100g) canned in olive oil had a slightly greater vitamin D content than the sardines in water (2,555.6±234.2 and 1,993.7±2,411.3 IUs (p<0.05) respectively). An evaluation of the vitamin D3 content in the olive oil and water used to can the sardines revealed 701.4±471.1 and 149.1±42.2 IUs in the total olive oil and water respectively recovered from the cans. It was determined that of the total vitamin D content in the can (sardines in olive oil or water) 20.9%±12.8% of vitamin D3 is found in the olive oil compared to only 14.2%±10.4% (p<0.05) vitamin D3 found in water. These results support the concept that sardines packed in olive oil may have less vitamin D3 than similar sardines packed in water. The analysis of the sardines revealed that they had more than 13 times the amount of vitamin D3 than that is reported in the USDA table of nutritional facts for canned sardines. This could be because the sardines were caught in the summer months when they are more likely to be consuming food containing vitamin D3 as a result of reduced synthesis of vitamin D3 in zooplankton and other lower life forms that the sardines consume. An alternative explanation for this increase in vitamin D3 content is the process of canning the sardines. Vital Choice, the supplier of the sardines, immediately ices the fish upon retrieval from the ocean (to ensure freshness) and then are canned in less than 5 hours after being caught. This process of freshness preservation could explain why the vitamin D content was so high; possibly an accurate representation of the original vitamin D content in the sardines

Hotelling's rule repealed? An examination of exhaustible resource pricing

Prices ; Natural resources