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  5. Demand for Fossil Fuels in the Energy Transition
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Demand for Fossil Fuels in the Energy Transition

Paper Session

Saturday, Jan. 6, 2024 12:30 PM - 2:15 PM (CST)

Convention Center, 225A
Hosted By: International Association for Energy Economics
  • Chair: Greg Upton, Louisiana State University

Heterogeneity in the Pass-Through from Oil to Gasoline Prices: A New Instrument for Estimating the Price Elasticity of Gasoline

Lutz Kilian
,
Federal Reserve Bank of Dallas
Xiaoqing Zhou
,
Federal Reserve Bank of Dallas

Abstract

We propose a new instrument for estimating the price elasticity of gasoline demand that exploits systematic differences across U.S. states in the pass-through of oil price shocks to retail gasoline prices. We show that these differences are primarily driven by the cost of producing and distributing gasoline, which varies with states’ access to oil and gasoline transportation infrastructure, refinery technology, and environmental regulations, creating cross-sectional gasoline price shocks in response to an aggregate oil price shock.

The Impact of Climate Policy on Oil and Gas Investment: Evidence from Firm-Level Data

Christian Bogmans
,
International Monetary Fund
Ervin Prifti
,
International Monetary Fund
Andrea Pescatori
,
International Monetary Fund

Abstract

Using a difference-in-differences research design with a comprehensive firm-level dataset of yearly capital expenditures, we assess the contribution to the investment decline from climate policy exposure and the role of the Paris Agreement in 2015.

Assessing the Future of Oil and Gas Production and Local Government Revenue in Five Western U.S. Basins

Daniel Raimi
,
Resources for the Future
Brian Prest
,
Resources for the Future
Zach Whitlock
,
Resources for the Future

Abstract

To inform decisionmakers at local, regional, and national levels, we model how oil and gas production and related government revenue could change in five western US regions (located in four states) depending on future oil and natural gas prices under three scenarios of climate policy ambition.

Oil Market Efficiency, Quantity of Information, and Oil Market Turbulence

Marc Gronwald
,
International Business School Suzhou, Xi'an Jiaotong-Liverpool University; CESifo and ifo Institute
Sania Wadud
,
Leeds University Business School, University of Leeds
Kingsley Dogah
,
Department of Finance, Accounting and Economics, University of Nottingham Ningbo

Abstract

This paper analyses the informational efficiency of the WTI crude oil markets using a recently proposed quantitative measure for market inefficiency. The procedure measures the extent to which observed oil price behaviour deviates from the Random Walk benchmark which represents an efficient market. The key findings are, first, that crude oil market inefficiency varies over time. Second, abrupt increases in inefficiency occur during extreme episodes such as the price downturns witnessed in 2008, 2014, and early 2020. Third, the paper puts forward the interpretation of oil market inefficiency as oil market turbulence. Fourth, the paper demonstrates that oil market turbulence (or the drivers behind it) have negative macroeconomic consequences.

Discussant(s)
Timothy Fitzgerald
,
Texas Tech University
JEL Classifications
  • Q4 - Energy