WORKING PAPERS

• Kellogg, Ryan and Richard L. Sweeney, Impacts of the Jones Act on U.S. Petroleum Markets, NBER working paper #31938 (December, 2023), revise-and-resubmit at the Journal of Law and Economics..
  - Working paper.

  [abstract]

  We study how the Jones Act -- a 100-year-old U.S. regulation that constrains domestic waterborne shipping -- affects U.S. markets for crude oil and petroleum products. We collect data on U.S. Gulf Coast and East Coast fuel prices, movements, and consumption, and we estimate domestic non-Jones shipping costs using freight rates for Gulf Coast exports. We then model counterfactual prices and product movements absent the Jones Act, allowing shippers to arbitrage price differences between the Gulf and East Coasts when they exceed transport costs. Eliminating the Jones Act would have reduced average East Coast gasoline, jet fuel, and diesel prices by $0.63, $0.80, and $0.82 per barrel, respectively, during 2018-2019, with the largest price decreases occurring in the Lower Atlantic. The Gulf Coast gasoline price would increase by $0.30 per barrel. U.S. consumers' surplus would increase by $769 million per year, and producers' surplus would decrease by $367 million per year.

• Covert, Thomas R. and Ryan Kellogg, Environmental Consequences of Hydrocarbon Infrastructure Policy, NBER working paper #23855 (revised 2023), revise-and-resubmit at the Journal of Political Economy.
  - Working paper (September, 2023), Original NBER working paper #23855 (with old title 'Crude by Rail, Option Value, and Pipeline Investment') (2017)

  [abstract]

  We study policies that aim to 'keep carbon in the ground' by blocking fossil fuel infrastructure investment. Our analysis relies on a model of hydrocarbon production and transportation, incorporating substitution between pipeline infrastructure and flexible alternatives, like crude-by-rail. We apply the model to the Dakota Access Pipeline (DAPL), which moves oil from North Dakota to Texas and was controversially completed in 2017. Had DAPL's construction been enjoined, we estimate that 81% of the blocked pipeline flows would move by rail instead. This substitution induces both private costs and local environmental damage, since rail transport imposes greater local externalities than pipelines.

• Kellogg, Ryan, The End of Oil, working paper. .
  

  [abstract]

  It is now plausible to envision scenarios in which global demand for crude oil falls to essentially zero by the end of this century, driven by improvements in clean energy technologies, adoption of stringent climate policies, or both. This paper asks what such a demand decline, when anticipated, might mean for global oil supply. One possibility is the well-known ``green paradox'': because oil is an exhaustible resource, producers may accelerate near-term extraction in order to beat the demand decline. This reaction would increase near-term CO2 emissions and could possibly even lead the total present value of climate damages to be greater than if demand had not declined at all. However, because oil extraction requires potentially long-lived investments in wells and other infrastructure, the opposite may occur: an anticipated demand decline reduces producers' investment rates, decreasing near-term oil production and CO2 emissions. To evaluate whether this disinvestment effect outweighs the green paradox, or vice-versa, I develop a tractable model of global oil supply that incorporates both effects, while also capturing industry features such as heterogeneous producers, exercise of market power by low-cost OPEC producers, and marginal drilling costs that increase with the rate of drilling. I find that for model inputs with the strongest empirical support, the disinvestment effect outweighs the traditional green paradox. In order for anticipation effects on net to substantially increase cumulative global oil extraction, I find that industry investments must have short time horizons, and that producers must have discount rates that are comparable to U.S. treasury bill rates.

• Covert, Thomas R., Ryan Kellogg and Richard L. Sweeney, "Auctions vs. Negotiations with Spillovers: Evidence from the U.S. Land Ordinance and the Shale Boom", Work in progress

• Covert, Thomas R., Ryan Kellogg and Richard L. Sweeney, "Frack Time versus Slack Time", Work in progress