Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/312044 
Year of Publication: 
2024
Series/Report no.: 
CESifo Working Paper No. 11534
Publisher: 
CESifo GmbH, Munich
Abstract: 
The oil and gas industry's early 2000's fracking and horizontal drilling revolution realigned the industry and larger economies. This study uses New Growth Theory to evaluate innovation across an industry with various integrated but distinct upstream, midstream, and downstream units. Two issues are considered. First, how did Independent returns vary within the industry by equity, commodity, and distillate risks relative to Integrated majors before and after the fracking revolution? The fracking revolution changed within-group technology that favored Independent firms who outperformed larger Integrated producers. Second, how did upstream, midstream, and downstream risks vary across the industry by equity, commodity, and distillates relative to Integrated firms before and after the fracking revolution? Exploration & production across-group Independent equity return gaps with the fracking revolution increased the most for any Independent sector, either within or across decompositions, indicating that the greatest fracking industry realignment was in equity markets as participants increased upstream exploration & production returns closer to oil and gas extraction.
Subjects: 
New Growth Theory
hydraulic-fracturing
technology
financial
commodity markets and technological change
JEL: 
G12
L71
L72
O13
O14
Q40
Q41
Document Type: 
Working Paper
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