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Investment by oil firms positively affects the futures basis and negatively predicts excess returns on crude oil futures. I build an equilibrium model of drilling, exploration, and storage to understand these facts. Firms’ capital stock lowers extraction costs as firms drill in increasingly expensive fields. Drilled wells produce the resource at a geometrically declining rate; however, by specifying consumers’ habit level equaling production from old wells, the futures basis and risk premium are only related to drilling, investment, and inventory. Investment leads to a more elastic drilling response by firms and dampens oil price increases from demand shocks, thus lowering the risk premium.

This paper studies the hedging activities of 119 U.S. oil and gas producers from 1998 to 2001 and evaluates their effect on firm value. Theories of hedging based on market imperfections imply that hedging should increase the firm's market value (MV). To test this hypothesis, we collect detailed information on the extent of hedging and on the valuation of oil and gas reserves. We verify that hedging reduces the firm's stock price sensitivity to oil and gas prices. Contrary to previous studies, however, we find that hedging does not seem to affect MVs for this industry.

States burdened with conflict have been considered to be undesirable destinations for foreign direct investment (FDI) due to, inter alia, political instability, regulatory unpredictability, and expropriation risk. However, we develop an alternative view based on corporate governance and real option theories. We analyze a dataset of FDI location decisions made in the Oil and Gas sector by 250 US firms across 44 countries between 2007 and 2013. After controlling for energy reserves, the results show counter-intuitively, that civil war and terrorism risks, and terrorist events are positively associated with US investment in Oil and Gas. US subsidiaries also show high levels of ownership commitment. It is tempting to conclude that US Oil and Gas is a wholly unique, resource-bound case, but we argue that this disconnect may have occurred for two reasons. First, a threat of conflict and violence can make MNEs exercise their growth options and expand resource extraction sooner rather than later. Second, political instability does not necessarily lead to higher levels of FDI expropriation risk. On the contrary, instability can reduce the incentives for the state to seize assets from technologically superior MNEs, i.e. it may reduce expropriation risk. Just as the rule of law and 'good' governance can constrain a state from expropriation, there are theoretical reasons why 'bad' governance resulting from instability and incapacity may do so, too.

From late 2008 to 2014, oil and equity returns were more positively correlated than in other periods. In addition, we show that both oil and equity returns became more responsive to macroeconomic news. We provide empirical evidence that these changes resulted from the zero lower bound (ZLB) on nominal interest rates, consistent with the theoretical predictions of a model that includes the ZLB. Although the ZLB alters the economic environment in theory, supportive empirical evidence has been lacking. Our paper provides clear evidence of the ZLB altering the economic environment.

This article presents the results of a study that analysed whether social responsibility had any bearing on the decision making of institutional investors. Being that institutional investors prefer socially aligned organizations, this study explored to what extent the corporate actions and/or social/environmental investments influenced their decisions. Our results suggest that there are specific variables that affect the perceived value of the organization, leading to decisions to not only invest, but whether to hold or sell the shares, and therefore having a consequential impact on the capital market's valuation.

To meet the growing global demand for minerals and new energy sources, governments in the Global South advance policy interventions to improve the unequal distribution of the cost and benefits of resource extraction. This paper explains the politics behind the implementation of the Closing Development Gaps (CDG) Plan, a new redistributive plan on behalf of Amazonian Indigenous peoples near the oil circuit in the Loreto region of Peru. It emphasizes the long-lasting impact of mobilizing strategies of indigenous organizations, which relayed critical information to policymakers about the claims both old and new of Indigenous peoples neighboring the oil circuit. It also draws attention to the permeability of state institutions, which allowed newer state agencies with distinct policy streams to advance new solutions to old problems. While the CDG Plan seeks to improve resource governance by focusing on infrastructure gaps (e.g., water and sanitation, electrification), it excludes the “political gaps” and the most contentious claims related to the environment that have moved Amazonian Indigenous peoples into struggle in recent years.

Growing conventional wisdom suggests that authoritarian legislatures prevent oil nationalizations in party-based regimes. However, country scholars and media outlets remain skeptical. We develop a theory aligning with the skeptics. We argue that oil expropriations and legislative closures are endogenous to the process of the consolidation of party-based autocracies. New authoritarian parties close legislatures when they seize power and do not reopen them until they can ensure their dominance of the new legislature, a process abetted by oil expropriations. We test the argument using recently developed cross-case comparative Bayesian qualitative techniques. Evidence shows support for our theory. Our findings suggest that authoritarian legislatures are less constraining in terms of oil nationalizations than new conventional wisdom suggests. Additionally, our evidence points to a different interpretation of the role legislatures play in the evolution of authoritarian regimes.

This paper develops a long-run output relation for a major oil-exporting economy where the oil income-to-output ratio remains sufficiently high over a prolonged period. It extends the stochastic growth model developed in Binder and Pesaran (1999) by including oil exports as an additional factor in the capital accumulation process. The paper distinguishes between the two cases where the growth of oil income, g o, is less than the natural growth rate (the sum of the population growth, n, and the growth of technical progress, g), and when go ≥ g + n. Under the former, the effects of oil income on the economy’s steady growth rate will vanish eventually, while under the latter oil income enters the long-run output equation with a coefficient which is equal to the share of capital if it is further assumed that the underlying production technology can be represented by a Cobb–Douglas production function. The long-run theory is tested using quarterly data on nine major oil economies. Overall, the test results support the long-run theory, with the existence of long-run relations between real output, foreign output and real oil income established for six of the nine economies considered.

The petroleum industry is unique: it is an industry without which modern civilization would collapse. Despite the advances in alternative energy, petroleum's role is still central. Petroleum still drives economics, geopolitics, and sometimes war. The history of petroleum is, to some measure, the history of the modern world. This book represents a concise but complete one-volume reference on the history of the petroleum industry from pre-modern times to the present day, covering all aspects of business, technology, and geopolitics. The book also presents an analysis of the future of petroleum, and a highly useful set of statistical graphs. Anyone interested in the history, status, and outlook for petroleum will find this book a uniquely valuable first place to look. This new second edition incorporates all the revolutionary changes in the petroleum landscape since the first edition was published, including the boom in extraction of oil and gas from shale formations using techniques such as fracking and horizontal drilling. This second edition of Historical Dictionary of the Petroleum Industry contains a chronology, an introduction, appendixes, and an extensive bibliography. The dictionary section has over 500 cross-referenced entries on companies, people, events, technologies, countries, provinces, cities, and regions related to the history of the world's petroleum industry. This book is an excellent resource for students, researchers, and anyone wanting to know more about the petroleum industry.

Purpose - This paper aims to identify the pertinent factors for tacit knowledge transfer within a major state-owned Brazilian oil company - Petrobras.Design methodology approach - The research analyses the literature concerning tacit knowledge transfer within organisations and, using a quantitative approach based on exploratory factorial analysis, seeks to collect facts in order to identify relevant factors for tacit knowledge transfer within the organisation in question.Findings - It is seen that idiosyncratic factors, the knowledge management strategy adopted by the company, and its organisational structure are relevant elements for the success of tacit knowledge transfer within the organisation.Research limitations implications - The study was conducted just in the Sales and Marketing division of Petrobras. Therefore, its external validity cannot be tested and any attempt to make a statistical generalisation would be flawed. Another limitation is related to the acuity of perception of the employees involved in relation to tacit knowledge transfer. These limitations are related to the possibility of many varied interpretations of reality given by the respondents, in their attempt - not necessarily conscious - to paint a good picture of the company, to limitations of information available while they answer the questionnaire, to the epistemological model of the respondent, and to the very fact that they work in a state-owned, rather than in a public oil company.Originality value - Three propositions arising from the results obtained are consolidated and presented in order that they may be tested in a future explanatory study.