Efficiency of U.S. Oil and Gas Companies toward Energy Policies

Abstract

The petroleum industry faces crucial environmental problems that exacerbate business instability, such as climate change and greenhouse gas emission regulations. Generally, governments focus on pricing, environmental protection, and supply security when developing energy policy. This article evaluates the technical efficiency of 53 oil and gas companies in the United States during the period 1998–2018 using the stochastic frontier analysis methods and investigates the degree to which energy policies influence the efficiency levels in these companies. Our empirical results show that the average technical efficiency of the 53 U.S. oil and gas companies is 0.75 and confirm that prices, production, consumption, and reserves of the U.S. petroleum and gas have a significant influence on technical efficiency levels. Specifically, our findings show that renewable energy and nuclear power contribute to explaining the distortion between the optimal and observed output of the U.S. oil and gas companies.