Patchwork Policies, Spillovers, and the Search for Oil and Gas

Abstract

The United States has a complex patchwork of mineral ownership, where rights to oil and gas may be owned by the federal government, state governments, or private agents. I show why the policies imposed by one owner have theoretically ambiguous spillover effects on the drilling and production outcomes of neighboring plots of land. Exploiting a natural experiment in Wyoming with exogenous ownership assignment, I find significant spillovers: federal land close to state land has a lower probability of drilling than federal land far from state land. (JEL H82, L71, P14,Q35, Q38)

Information asymmetry, trade, and drilling: evidence from an oil lease lottery

“…Throughout the analysis, we use Conley (1999) spatial standard errors unless otherwise indicated: We allow ε i and ε j to be correlated if parcel i and parcel j are within twenty miles of each other, consistent with Lewis (2019).…”