The Marginal Oil Field

The recent diffusion of novel oil technologies has increased the variability of petroleum resources. Today, it is possible to mine oil sands, to extract liquids from tight rocks and to produce high-viscosity oils. Using the Rystad dataset, we examine the sensitivity of 14343 deposits to a marginal change in oil prices or in marginal extraction costs. According to our estimates the variations in the crude properties combined with the value combined with the differences in the marginal extraction costs shift the (median) value of an extra barrel from $29.00 to $64.63 depending upon the type of oil. The range between these two extremes suggests that different oils could respond differently to common as well as specific shocks. Our findings are relevant for the design of Pigouvian taxes affecting the oil sector.