Subsidizing strippers : the impact of royalty rate reductions on the intensive and extensive production margins of marginally producing oil wells

Abstract

Substantial research has been conducted on the impacts of taxation on oil production. However, a void in the literature exists as the distinction has not yet been made between significant and marginal oil production. Using well-level production data from the state of Wyoming, this thesis estimates the impact of royalty rate reductions on marginally-producing, federal oil wells--commonly referred to as stripper wells. The empirical analysis is conducted using fixed effects double- and triple-difference models and a more traditional multiple regression model. The results suggest that production from federal stripper wells increased substantially during the royalty rate reduction program--on both the intensive and extensive production margins.