Big Oil and the value of their assets if we will not burn it any longer

The Economist is reporting on the answer big oil companies (e.g. Exxon, Shell) have given to questions from big institutional investors on "how climate change might affect their business and, in particular, whether any of their oil reserves might become 'stranded assets'—unusable if laws to curb emissions of carbon dioxide became really tight. Exxon Mobil and Shell are the most recent to get back with their assessment of the risk: zero."

Optimal extraction when existing wells are limited in capacity.

Econbrowser: "Production flows from a given oil field naturally decline over time, but we keep trying harder and technology keeps improving. Which force is winning the race?" Hamilton reviews a recent paper by Anderson, Kellogg, and Salant (2014) who notice that production from existing wells do not respond to price movements, but the drilling of new wells does. They reformulate a Hotelling model taking that can explain this phenomenon based on capacity constraints of existing wells.

Fracking Growth

New discussion paper by Thiemo Fetzer, who presented it earlier this year at OxCarre

This paper estimates the effect of the shale oil and gas boom in the United States on local economic outcomes. The main source of exogenous variation to be explored is the location of previously unexplored shale deposits [, which is used to] to estimate the localised effects from resource extraction. Every oil- and gas sector job creates about 2.17 other jobs. Personal incomes increase by 8% in counties with at least one unconventional oil or gas well. The resource boom translates into an overall increase in employment by between 500,000 - 600,000 jobs. A key observation is that, despite rising labour costs, there is no Dutch disease contraction in the tradable goods sector, while the non-tradable goods sector contracts. [He reconciles] this finding by providing evidence that the resource boom may give rise to local comparative advantage, through locally lower energy cost. This allows a clean separation of the energy price effect distinct from the local resource extraction effects.

Update 25/08/2014: new webapp of the paper here

The effect of the Bakken oil boom in the region

National Geographic reports: Bakken Oil Boom Brings Growing Pains to Small Montana Town An influx of workers leaves housing scarce—and the jail full.

OxCarre's Brock Smith and Alex James presented preliminary work on a related issue recently at the OxCarre Conference. Expect more soon!