The Local Employment Impacts of Hydraulic Fracturing and Determinants of Dutch Disease (with Ralph Mastromonaco), Resource and Energy Economics, 2017
Jurisdictional Tax Competition and the Division of Nonrenewable Resource Rents (with Dale Manning), Environmental and Resource Economics, 2017
An Estimate of the Producer Cost of Liability for Oil Spills, Applied Economics Letters, 2017
Why Have Greenhouse Emissions in RGGI States Declined? An Econometric Attribution to Economic, Energy Market and Policy Factors (with Brian Murray), Energy Economics: Volume 51, September 2015, Pages 581-589
The level and distribution of the costs of tradable allowance schemes are important determinants of whether the regulation is ultimately enacted. Theoretical and simulation models have shown that updating allowance allocations based on firm emissions or output can improve the efficiency of the scheme by acting as a production subsidy. Using the U.S. NOx Budget Program (NBP) as a case study, this analysis tests whether power plants in states which chose an updating allocation increase their electricity production relative to plants in states that chose a fixed allocation. Results find that updating allocations led to a 5 percentage point increase in capacity factors for natural gas combined cycle generators and no effect or a modest decrease for coal generators. These findings imply that an updating allocations confers a modest but meaningful subsidy to production relative to a fixed allocation and that firm responses are heterogeneous based on production technology and market conditions.
This paper tests a learning model of regulatory deterrence. Firms exert compliance effort based on their belief about a regulator’s effort level at detecting violations. Firms use regulatory actions to learn about the regulator and update their own compliance efforts accordingly. This theoretical model suggests that deterrence will be most effective when regulators have discretion or when firms are inexperienced. Econometric analysis of inspections of Pennsylvania oil and gas wells supports the model. Econometric results show that inexperienced firms are substantially more deterred than experienced firms. These results are robust to regulatory targeting in inspections, unobserved heterogeneity at the firm and site level, and different measures of experience and enforcement.
Subglobal and subnational policies aimed at reducing greenhouse gases are often thought to be less effective than more geographically comprehensive policies as production, and thus emissions, of trade exposed industries may move from the regulated to the unregulated regions. This so-called leakage may negate all emission reductions from the regulated regions and, even worse, may lead to an overall increase in emissions if the unregulated regions have equally or more emissions intensive production. However, if the unregulated regions have less emissions intensive production, the regional regulation may prompt more switching to the relatively cleaner producers than would otherwise occur, creating a type of beneficial leakage. We use detailed electricity generation and transmission data to show that this might be the case for the Regional Greenhouse Gas Initiative (RGGI), a CO2 cap-and-trade program for the electricity sector in select Northeastern U.S. states. We find evidence that electricity generation did leak out of the RGGI region to surrounding state, but electricity generation in the non-capped jurisdictions is less emissions intensive than in the RGGI region, resulting in a net decrease in aggregate emissions. Back-of-the-envelope calculations suggest that one-quarter of apparent emissions reductions actually leaked but that this served to reduce total combined emissions by an additional one percent.
I propose a framework to evaluate the impact of ethanol on energy security from an economic perspective. In this model, economic energy efficiency maximizes a social or governmental objective function with respect to energy price levels and shocks. This tradeoff can entail raising expected energy prices while lowering price volatility. I develop a theoretical model showing ethanol’s potential to lower overall fuel price volatility and estimate this relationship with both structural and reduced form approaches. I show that ethanol does not substantially lower U.S. gasoline price volatility or insulate gasoline prices from oil shocks in the absence of a binding quantity mandate. Ethanol can lower gasoline price volatility under a binding mandate, but this comes at substantial expected cost. In sum, ethanol is not an effective way to mitigate world oil price shocks and does not enhance US energy security.
The Ethanol Mandate and Corn Price Volatility (with Sul-Ki Lee)
Food price shocks are a major public concern, particularly in low income regions. This paper examines the impact of the United States ethanol mandate on food price volatility. We focus on corn price volatility because corn is both a major ethanol feedstock and a major international source of calories. Using agricultural commodity price time series, we provide suggestive evidence that a one billion gallon per year increase in the ethanol mandate increases corn price volatility by approximately 3.3 percent. Identification relies on a series of falsification tests which yield null results for commodities that are not directly related to ethanol production. Our results suggest that the ethanol mandate has increased the likelihood of very high price levels by even more than previously thought.
Regulatory Enforcement in Oil & Gas Well Production
Learning By Doing in Oil and Gas Production (with Michael Redlinger and Ian Lange)