WORKING PAPERS

  • Covert, Thomas R. and Ryan Kellogg, Environmental Consequences of Hydrocarbon Infrastructure Policy, NBER working paper #23855 (revised 2023). 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 and Richard L. Sweeney, Impacts of the Jones Act on U.S. Petroleum Markets, NBER working paper #31938 (December, 2023). 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., 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