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Browsing Baker Institute Publications by Author "Agerton, Mark"
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Item Decomposing Crude Price Differentials: Domestic Shipping Constraints or the Crude Oil Export Ban?(2017) Agerton, Mark; Upton, Gregory B. Jr.; James A. Baker III Institute for Public PolicyOver the past five years the U.S. domestic crude benchmark, WTI, diverged considerably from its foreign counterpart, Brent. Some studies pointed to the crude oil export ban as the main culprit for this divergence, but pipeline capacity was also scarce during this time. To understand the drivers of domestic crude oil discounts, we decompose domestic price differentials for multiple crudes into the contributions of shipping and export constraints. We find that scarce pipeline capacity explains the majority of the deviation of mid-continent crude oil prices from their long-run relationship with Brent crude, while refining changes explain very little. This implies that the deleterious effects of the export ban may have been exaggerated.Item Effects of Low Oil Prices on U.S. Shale Production: OPEC Calls the Tune and Shale Swings(James A. Baker III Institute for Public Policy, 2015) Krane, Jim; Agerton, Mark; James A. Baker III Institute for Public PolicyItem Employment Impacts of Upstream Oil and Gas Investment in the United States(2017) Agerton, Mark; Hartley, Peter R.; Medlock, Kenneth B. III; Loch-Temzelides, Ted P.; James A. Baker III Institute for Public PolicyItem Employment Impacts of Upstream Oil and Gas Investment in the United States(James A. Baker III Institute for Public Policy, 2014) Agerton, Mark; Hartley, Peter R.; Medlock, Kenneth B. III; Loch-Temzelides, Ted P.; James A. Baker III Institute for Public PolicyTechnological progress in the exploration and production of oil and gas during the 2000s has led to a boom in upstream investment and has increased the domestic supply of fossil fuels. It is unknown, however, how many jobs this boom has created. We use time-series methods at the national level and dynamic panel methods at the state level to understand how the increase in exploration and production activity has impacted employment. We find robust statistical support for the hypothesis that changes in drilling for oil and gas as captured by rig counts do, in fact, have an economically meaningful and positive impact on employment. The strongest impact is contemporaneous, though months later in the year also experience statistically and economically meaningful growth. Once dynamic effects are accounted for, we estimate that an additional rig count results in the creation of 37 jobs immediately and 224 jobs in the long run, though our robustness checks suggest that these multipliers could be bigger.Item Global LNG Pricing Terms and Revisions: An Empirical Analysis(James A. Baker III Institute for Public Policy, 2014) Agerton, Mark; James A. Baker III Institute for Public PolicyMost LNG is sold under confidential, bilateral long-term contracts, particularly in Asia. Thus, though prices are thought to be indexed to crude oil, actual prices, contract terms and price revision clauses are not known. Therefore, I use customs data and techniques for detecting multiple unknown structural breaks in cointegrated regressions to characterize empirical pricing relationships and make inferences about pricing terms for 16 Japanese, South Korean, Taiwanese and Spanish LNG price series. LNG does appear to be indexed to oil, but terms appear considerably more complex and varied than rules of thumb. I find evidence for S-curve behavior, multiple revisions and variation in both the degree of indexation and the specification of oil benchmarks. Japanese terms are revised most. Terms for the other importers appear more stable, and indexation is weakest in Spain. This paper complements existing work on gas market integration, which largely ignores the data-generating process for LNG prices.Item Global LNG Pricing Terms and Revisions: An Empirical Analysis(James A. Baker III Institute for Public Policy, 2015) Agerton, Mark; James A. Baker III Institute for Public PolicyAsian long-term contracts for liquefied natural gas (LNG) are generally thought to index LNG prices to oil prices. This should mean that LNG and oil prices are cointegrated. However, statistical evidence for cointegration using Japanese data is not strong. To resolve this puzzle, I examine 16 Japanese, South Korean, Taiwanese, and Spanish LNG import price series and allow for multiple, unknown structural breaks in the relationship to oil prices. This resolves the puzzle, and I provide estimates for the timing of breaks and the underlying average pricing terms. I relate these to count, volume, and duration data on long-term contracts and discuss how to interpret econometric estimates in light of contract data. This paper complements existing work on global gas market integration, which largely ignores how discrete changes in oil-indexed long-term contracts will affect empirical relationships.Item Learning Where to Drill: Drilling Decisions and Geological Quality in the Haynesville Shale(2020) Agerton, Mark; James A. Baker III Institute for Public PolicyItem The Economics of Natural Gas Flaring in U.S. Shale: An Agenda for Research and Policy(James A. Baker III Institute for Public Policy, 2020) Agerton, Mark; Gilbert, Ben; Upton, Gregory B. Jr.; James A. Baker III Institute for Public PolicyFlaring of natural gas associated with U.S. unconventional tight oil production is a significant environmental and policy issue for the sector. We marshal granular data to identify the bottlenecks in the oil and gas value chain that physically cause upstream flaring at the well. Motivated by this descriptive analysis, we further analyze the economic reasons for flaring, market distortions that could exacerbate it, and the cost to society of flaring. We lay out an agenda for researchers and policymakers charged with understanding and regulating flaring.