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  • Energy and Health Care Parallels: Maximizing Electric Utility Social Welfare.

    Reynolds, Douglas (2020-12-14)
    This pod cast, based on a paper from the 4th IAEE Eurasian Conference in Nur-Sultan, Kazakhstan, is about electric power markets. It considers consumer sovereignty in U.S. health care markets and then looks at the parallels between those health care markets and electric power markets. It then shows how one particular U.S. health care market mechanism called the Advantage Medicare System works best. It then explains how an Electric Power CEO bonus system, based on the Advantage System, can create better, more socially maximizing outcomes for electric power markets than the current consumer sovereignty based systems the world is using now.
  • Restructuring Alaska: An Alaska Oil, Gas and Industry Economic Treatise

    Reynolds, Douglas (None, 2020-07-31)
    This paper in the form of a treatise is about how to improve Alaska’s overall socio-economic welfare. It explains economic issues in Alaska starting with the Trans-Alaska (oil) Pipeline System (TAPS) and how TAPS interacts with Alaska’s oil industry and induces risk averse reactions by the state. It also explains how an alternative oil pipeline can replace TAPS in order to reduce Alaska’s expensive oil tax credits. The treatise also explains some of the issues surrounding how the oil tax credits work or don’t work including such interactions as how oil exploration is carried out, why shale-oil will not easily be developed in Alaska and how the credits subsidize Anchorage’s area energy costs to the detriment of the state as a whole. Ideas for economic development of the state are given including building natural gas infrastructure and how to set up electric utilities to maximize their value to the state. An alternative for Anchorage energy needs is a simple natural gas pipeline to Fairbanks with rail connection to Anchorage and eventually the use of TAPS for natural gas. An incentivized management system for monopoly electric power utilities is explained which can provide better cheaper electric power and an incentivized management system for a state owned oil company is explained which can help Alaska negotiate with OPEC to Alaska’s advantage. Aspects of the university and education funding are explained.
  • Pod Cast US Shale-Oil Production Peak

    Reynolds, Douglas (2020-07-08)
    This paper, in the form of a Pod Cast, estimates a U.S. shale-oil production trend forecast and explores potential consequences of that trend on U.S. and World macroeconomic conditions and growth prospects. It explains the economics of the Hubbert curve including a literature review both pro and con. It explains the relationship of shale-oil and shale-gas. It falsifies various U.S. shale-oil trend hypotheses using logic and econometrics. It then presents oil price expectations based on an analyses of entropy-economic relationships, physical energy characteristics, new-institutional economic theories of OPEC, and OPEC+ game-theoretic plays. Covid-19, OPEC+ and macro-economic principles are analyzed for their potential market changing effects using Schwartzian futurology methodology. A comparison of the current global civilization to past civilizations is also carried out.
  • Reynolds Curriculum Vita 2020

    Reynolds, Douglas (none, 2020-07-07)
  • Energy Civilization: Civilization's Ultimate Energy Forecast

    Reynolds, Douglas (None, 2020-06-16)
    This treatise is an addendum to Reynolds’ (2011). It looks at the U.S. shale-oil production trend, and specifically at the Hubbert peak of that trend. Simmons (2005), Deffeyes (2001), Hubbert, (1962), Norgaard (1990) and Campbell (1997), among others show how there can be a peak in oil production. Reynolds (2002, 2009) explains the economic and cost theory for how and why the Hubbert Curve works, including how the information and depletion effects create such a curve. Nevertheless, Maugeri (2007), Adelman and Lynch (1997), and Lynch (2002) suggest that one should never curve fit an oil production trend, contrary to most economic disciplines where curve fitting using econometrics is the norm. Although, as of early 2020 the COVID-19 recession is greatly affecting petroleum markets. Nevertheless, the Hubbert supply trend is relevant. Also, Reynolds and Umekwe (2019) show that shale-gas and shale-oil can be compliments or substitutes in production. Based on that relationship, once the U.S. shale-oil peak occurs, it may be the world’s ultimate Hubbert peak with much smaller and lower Hubbert cycles thereafter. Worldwide petroleum institutions and strategies will also change. This treatise estimates a U.S. shale-oil Hubbert peak, scrutinizes the Hubbert related theories and explores oil price forecasts, taking into account medium run COVID-19 oil demand effects.
  • Alaska's ice roads and investment decision in drilling: an empirical analysis

    Azmi Wendler, Sarah; Baek, Jungho; Reynolds, Douglas B.; Herrmann, Mark (2019-08)
    This thesis applies Autoregressive Distributed Lag modeling techniques to estimate the effects of ice road season lengths on exploration activities in Alaska within the North Slope. This analysis uses data on winter off-road travel from 2001-2018 in monthly intervals against exploration wells spudded. It is found that while ice roads do not affect overall drilling activities in the North Slope, the lengths of the season plays significant part in exploration of new fields. While this subject has become a popular subject due to variations in the ice road season, no similar statistical analysis has been conducted to date. Oil prices, production and Alaska's oil policy were also found to be important variables in characterizing exploration activity.
  • Reynolds Curriculum Vita

    None, 2019-10-10
    Curriculum Vita
  • Evidence of a Monopsony: The U.S. and Saudi Arabia before 1974

    Reynolds, Douglas (2019)
    A monopsony is a single buyer for multiple suppliers where the buyer forces the suppliers to pay lower than normal prices. An example of a monopsony is a single employer hiring multiple workers and where the workers have no competitive choice about where else to work and so are forced to accept lower than normal wages offered by the monopsonist. The same situation can happen with oil. Here we show a situation from 1965 to 1974 where Saudi Arabia and OPEC were forced to accept monopsonistic oil prices given by the U.S. and the West, a situation that may actually violate the U.S. Sherman act of 1890.
  • Institutional structure and the optimal level of lying

    Hiser, Rodney F.; Logan, Robert R. (1999)
    This study is an interdisciplinary comparative analysis of two institutional structures and their relation to lying. The author examines institutional structure through an institutional continuum with contrasting ideal-types at opposing ends. These ideal-types are the "private property order" and the "bureau." The author models lying as a benefit-cost analysis and examines lying through a two-person model of society called the "information relation." Using the information relation, he shows the problem of lying is an agency problem between the informer and the informee. In two separate analyses, the author evaluates the ideal-types' tendencies to either allow or hinder lying. In the first analysis, the author identifies seven protection-from-lying strategies and compares their necessary requirements to the institutional constraints of the ideal types. In the second analysis, the author examines six social phenomena, within the institutional context of each ideal type, that affect people's benefit-cost ratio of lying. The author concludes that there exists a positive correlation between the degree of central planning and the optimal level of lying, as seen from the point of view of each individual in society. The author argues that a movement on the continuum away from the private property order toward the bureau tends to (1) breakdown community relations, (2) provide incentive for society members to adopt value relativism, (3) change the nature of competition, (4) lower society's overall material standard of living, and (5) create a social environment of mutual self-deception. The author sees important implications in this study for the economics of information, theories of government regulation, and the sociology of science.
  • Market impacts and global implications of U.S. shale development and hydraulic fracturing: an economic, engineering, and environmental perspective

    Umweke, Maduabuchi Pascal; Baek, Jungho; Patil, Shirish; Perkins, Robert; Reynolds, Douglas (2018-05)
    The United States oil industry is experiencing a revolution because of significant oil production from tight oil plays since the mid-2000s. Advancements in horizontal well drilling and hydraulic fracturing are powering this new chapter in oil development. Increased oil production has brought billions of dollars of new revenue to oil companies involved in tight oil exploration and production, new jobs in the oil industry, and more tax revenue to oil regions around the U.S. However, tight oil resources do not only exist in the U.S. An understanding of the U.S. tight oil development experience could bring value to stakeholders within and outside the United States, and provide lessons and templates applicable in other tight oil regions. This research examines the U.S. tight oil experience and draws lessons for aspiring tight oil regions on the engineering, economic, and environmental fronts. On the economic front, I have examined an autoregressive distributed lag (ARDL) model on key oil industry macroeconomic data (West Texas Intermediate oil price, tight oil production, and rig count) from 2007 through 2016, and the impact of oil price on tight oil development for the Bakken, Eagle Ford, Niobrara, and Permian tight oil plays. The results show that oil companies in different plays react differently to oil price signals and do so in relation to oil field development characteristics. In addition, oil production and drilling intensity in the Eagle Ford play is found to be most responsive to oil price increases than the Permian, Bakken, or Niobrara oil plays. The Permian play was most resilient during the 2014 through 2016 oil price plunge. Oil production does not fall in response to a decrease in oil price, equally as it rises in response to oil price increase. Tight oil operators are quicker in bringing drilling rigs to service as prices rise than they take them away in response to falling oil prices, but do reduce drilling significantly in response to an oil price plunge. These results have significant ramifications for operators and assets in the respective oil plays or future plays with similar development characteristics. On the engineering front, I used petroleum engineering oil production forecasting Decline Curve Analysis techniques, the Drillinginfo Software, and historical development data of U.S. plays, to conduct oil production forecast for seven U.S. tight oil plays. Forecast results are shown to be comparable to forecasts by the Energy Information Administration (EIA). Building on previous EIA geologic studies on non-U.S. tight oil plays, and by selecting best analogues from within U.S. tight oil plays, I have completed an economic assessment and uncertainty analysis for 10 non-U.S. tight plays using a simple fiscal tax regime. The results indicate that the Eagle Ford play in Mexico, the Vaca Muerta play in Argentina, and the Qingshankou play in China rank highest among the plays studied. Of oil price, royalty rate, discount rate, well cost, extraction tax, and recovery factor parameters evaluated, results indicate that oil price and well cost are among the biggest drivers of profitability in these plays. On the environmental front, I conducted case studies on the busiest U.S. tight oil plays (Bakken and Eagle Ford) and examined the impact of tight oil development on the environment. Local solutions to environmental challenges alongside environmental regulations are discussed and presented as possible templates for other aspiring plays. Since securing freshwater sources alongside wastewater management emerge as major issues in tight oil development, a cost comparison is conducted for reused water disposal versus one-use water disposal options, for a hypothetical development. Results indicate that on a cost-per-well basis, the reduction in water disposal volume from subsurface frack flowback retention improves water reuse economics; the water reuse option is preferable to one-use water disposal for U.S. oil plays. This result points to potential cost savings for reused water disposal in regions such as the Bakken with few disposal wells.
  • Up in smoke: exploring the relationship between forest firefighting and subsistence harvest

    Rodrigues, Alyssa V. S.; Little, Joseph; Greenberg, Joshua; Trainor, Sarah; Brinkman, Todd J. (2018-05)
    Wildland firefighting in Alaska is changing due to the impact of climate change on the boreal forest. Changes to the wildland firefighting regime could have significant impacts on community participation during fall subsistence hunting and, consequentially, food security levels. Many rural Alaska communities have mixed cash-subsistence economies in which people have to balance their time between earning an income and harvesting subsistence foods. Cash income is necessary to pay for things such as housing, electricity, gasoline, gun, ammunition, and other capital necessary to engage in subsistence. This dissertation aims to better understand the current relationship between Type 2, or hand crew, wildland firefighting and subsistence, primarily fall subsistence hunting, through several methods. Surveys and interviews were conducted with Type 2 wildland firefighters followed by policy recommendations. Econometric modeling of the wildfire attributes, community attributes, and firefighting wages and dispatches was conducted. Lastly, a food production simulation was conducted. Utilizing these various methods gives a well-rounded understanding of the relationship between firefighting and subsistence. Firefighting wages currently contribute to subsistence harvest productivity. As climate change lengthens the fire season, rural Type 2 fire crews will continue to participate in firefighting and fall subsistence hunting. Only under the most extreme estimates of future wildland fires does time spent fighting fire reduce time spent on subsistence fall hunting by much so that rural communities are unable to meet their subsistence needs.
  • On the willingness-to-pay for Elodea removal in the Fairbanks North Star Borough

    Kaczmarski, Jesse I.; Little, Joseph; Greenberg, Joshua; Fix, Peter (2018-05)
    The empirical research conducted herein addresses a public need for the funding of a project that would eradicate Elodea in the Fairbanks North Star Borough (FNSB). The eradication project has been outlined and approved by State and Federal agencies and has gathered funding to begin the eradication process. The study aims to develop a mean willingness-to-pay value for survey participants by shifting the funding burden to property tax payers. This body of work includes a primer on Elodea in the borough, an overview of contingent valuation, a parametric approach to willingness-to-pay, and results of the study conducted on Fairbanks property owners. The average willingness-to-pay per survey respondent is $50.32. In addition, 72% of survey respondents voted for the enactment of the program at their proposed cost level. These financial burdens took values of $10, $30, $60, or $120 per year for 4 years to fund the proposed program. A penalized maximum log-likelihood estimation found that the most significant predictors for the likelihood of a yes vote are the respondent's perceived risk to the ecosystem and recreational opportunities. Additionally, the respondents concern for the use of herbicides in the borough to treat the Elodea infestation is highly significant. The high level of prior knowledge throughout the survey indicates that respondents had established view on Elodea prior to the survey.
  • Aligning electricity energy policies in Alaska: analysis of the power cost equalization and renewable energy fund programs

    Villalobos Meléndez, Alejandra; Little, Joseph; Huskey, Lee; Baek, Jungho (2012-05)
    Most rural Alaska communities are not road connected and must cope with challenging arctic environmental conditions. Due to their remoteness and sparse populations, these villages depend on isolated non-grid connected electric generation systems that operate on fuel oil. In Alaska, the Power Cost Equalization program is a 25 year long energy subsidy that targets rural residents to provide energy costs relief. A more recent state incentive program, the Renewable Energy Fund, was developed to expand the use of renewable resources and lower the cost of energy. Some rural communities have benefited from this program and have integrated renewable energy to their systems, particularly installing Wind-Diesel systems. Both programs have congruent goals of alleviating dependence on high cost fossil fuels to generate electricity as means to foster development and higher quality of life in rural Alaska communities. However, their incentive structure may conflict. This paper provides a review of these two energy subsidy policies with a particular focus on the Power Cost Equalization program and offers potential changes to its structure such that social cost impacts to rural residents are minimized while removing incentive barriers against energy efficiency and integration of renewable energy in rural Alaska communities.
  • The future of shale

    Malin, Michael A.; Vander Naald, Brian P.; Little, John; Tichotsky, John; Reynolds, Douglas (2016-05)
    This project examines the various drivers that led to the U.S. shale oil revolution in order to predict its place in the energy industry going forward and to analyze its effects on Alaska. The shale boom flooded the market with oil causing a dramatic decrease in crude oil prices in late 2014. With this price drop threatening to send Alaska into an economic recession, the future of shale should be of primary concern to all Alaskans as well as other entities that rely heavily on oil revenue. The primary driver leading to the shale revolution is technology. Advances in hydraulic fracturing, horizontal drilling, and 3D seismic mapping made producing shale oil and gas possible for the first time. New technologies like rotary steerable systems and measurements while drilling continue to make shale production more efficient, and technology will likely continue to improve. Infrastructure helps to explain why the shale revolution was mostly an American phenomenon. Many countries with shale formations have political infrastructure too unstable to risk shale investment. Capital infrastructure is a primary strength of the U.S. and also helps to explain why shale development didn't find its way up to Alaska despite having political stability. Financial infrastructure allowed oil companies to receive the funding necessary to quickly bring shale to the market. The final driver explored is crude oil prices. High oil prices helped spark the shale revolution, but with the recent price crash, there is uncertainty about its future. With production costs continually falling due to technology improvements and analysts predicting crude oil prices to stabilize above most project breakeven points, the future of shale looks bright.
  • Invasive elodea threatens remote ecosystem services in Alaska: a spatially-explicit bioeconomic risk analysis

    Schwoerer, Tobias; Little, Joseph; Adkison, Milo; Baek, Jungho; Hayward, Greg; Morton, John (2017-05)
    This dissertation links human and ecological systems research to analyze resource management decisions for elodea, Alaska's first submerged aquatic invasive plant. The plant likely made it to Alaska through the aquarium trade. It was first discovered in urban parts of the state but is being introduced to remote water bodies by floatplanes and other pathways. Once introduced, elodea changes freshwater systems in ways that can threaten salmon and make floatplane destinations inaccessible. The analysis integrates multiple social and ecological data to estimate the potential future economic loss associated with its introduction to salmon fisheries and floatplane pilots. For estimating the effects on commercial sockeye fisheries, multiple methods of expert elicitation are used to quantify and validate expert opinion about elodea's ecological effects on salmon. These effects are believed to most likely be negative, but can in some instances be positive. Combined with market-based economic valuation, the approach accounts for the full range of potential ecological and economic effects. For analyzing the lost trip values to floatplane pilots, the analysis uses contingent valuation to estimate recreation demand for landing spots. A spatially-explicit model consisting of seven regions simulates elodea's spread across Alaska and its erratic population dynamics. This simulation model accounts for the change in region-specific colonization rates as elodea populations are eradicated. The most probable economic loss to commercial fisheries and recreational floatplane pilots is $97 million per year, with a 5% chance that combined losses exceed $456 million annually. The analysis describes how loss varies among stakeholders and regions, with more than half of statewide loss accruing to commercial sockeye salmon fisheries in Bristol Bay. Upfront management of all existing invasions is found to be the optimal management strategy for minimizing long-term loss. Even though the range of future economic loss is large, the certainty of long-term damage favors investments to eradicate current invasions and prevent new arrivals. The study serves as a step toward risk management aimed at protecting productive ecosystems of national and global significance.
  • Willingness to pay for reindeer meat attributes: a niche market study in Interior Alaska

    Burke, Nathaniel C.; Little, Joseph; Greenberg, Joshua; Wright, Christopher (2017-05)
    The Alaskan market for reindeer meat is unique. This study's aim is to estimate the average consumer willingness to pay for a range of reindeer meat attributes. These attributes include those that have a direct impact on meat quality such as cut and fat percentage, as well as intangible qualities, such as where the meat is grown and by whom it was raised. The study focuses on the preferences of people in Interior Alaska, specifically the Fairbanks Northstar Borough. The Reindeer Act of 1937 and supply infrastructure limitations have both contributed to a low level of reindeer meat production in Alaska. This study uses an adaptive choice-based conjoint to measure what attributes participants find most important and estimate how much they are willing to pay for those reindeer meat attributes.
  • Dichotomous choice contingent valuation willingness to pay estimates across geographically nested samples: case study of Alaskan Steller sea lion

    Turcin, Branka (2001-12)
    This thesis examines Willingness-to-Pay (WTP) for an endangered species across geographically nested samples using the Contingent Valuation Method (CVM). The samples range from the boroughs that contain critical habitat for the Steller sea lion to the state that contains these boroughs to the entire United States. Depending on the assumptions of the model, WTP varies tremendously from sample to sample. When WTP is unrestricted to the non-negative region, mean WTP for the United States is the highest and it is the lowest for the boroughs. The null hypotheses that mean WTP estimates are greater than zero were rejected for the boroughs and the state but it was not rejected for the United States based on the 95% confidence intervals. When WTP is restricted to the non-negative region, the WTP does not differ significantly from sample to sample. The estimation results may lead to dramatically different policy implications.
  • How oil prices impact the labor market: empirical evidence from Alaska

    Bocklet, Johanna; Baek, Jungho; Wright, Christopher; Little, Joseph (2016-05)
    The present paper uses a linear autoregressive distributed lag (ARDL) approach in order to test for symmetric effects of oil price changes on employment in the oil-industry and employment in non-oil industries in Alaska. The ARDL model allows for the examination of short and long-run effects of employment by changes in crude oil prices, interest rate and personal income. Using quarterly data over the period 1987-2015, the long run results show strong positive correlation of crude oil prices and oil-industry employment and negative correlation between crude oil prices and employment in the non-oil industry in Alaska, supporting the sectoral shift hypothesis. Furthermore, interest rates significantly impact employment in both economic sectors, in the short and in the long run. While a higher interest rate leads to job creation in the oil-industry, it causes job destruction in the non-oil industry.
  • Price credit and price risk simulation for Alaska natural gas pipleline project

    Cao, Yue (2003-05)
    This work describes the price risk involved in developing an Alaska Natural Gas Pipeline. Three alternatives were developed. They are an ALCAN Only 4.5 Bcf/day case, a Y-line case, and an ALCAN Only 5.5 Bcf/day case. The simulation result supports the conclusion that the ALCAN Only 4.5 Bcf/day case would be the most feasible and flexible choice for the long-run gas development with less commodity risk. Also, the price credit simulation was run based on the EIA natural gas price forecast. It shows how a Federal Tax Credit helps to reduce price risk making this marginal project more acceptable for participating oil companies. However it might not be revenue neutral for the Federal Government. The risk-assessment model was constructed in the Excel spreadsheet with a commercially purchased add-in feature (@RISK by Palisade Corp.) that performed the Monte Carlo simulation and the probabilistic outcomes. It was designed to be a dynamic tool that could estimate production performance with associated costs, and product prices to Yield an economic analysis. The model was specifically designed for the Alaska Natural Gas Pipeline. This work could be useful for government, companies, and any individual, who is currently involved with the Alaska Natural Gas Act.
  • A statistical analysis of Alaskan oil and natural gas lease bids

    Russell, Sara Lynn (2002-05)
    This study statistically analyzes the behavior of oil and gas lease bidders in Alaska using pooled cross-sectional time series data from 1959 to 1998. The two players associated with this data set are the corporate or major players and the independent or non-major players. The behavior of each group is statistically distinct. Majors maximize profit by exploiting oil and gas; non-majors maximize profit by reselling the leases. The effect of joint bidding is also investigated. The consequence of ownership of the Trans Alaska Pipeline System or TAPS is also considered (all owners of the TAPS are major firms). The findings intimate that owners have a distinct advantage over non-owners. Owners bid significantly higher. Another aspect of the pipeline is the tariff associated with the TAPS. While North Slope sales are more profitable than other sales, the tariff combined with diminishing productivity of leases results in fewer bidders for northern sales.

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