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

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Date

2016

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Montana State University - Bozeman, College of Agriculture

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.

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