Prices or politics? The influence of markets and political party changes on oil and gas development in the United States

Abstract

This paper analyzes the influence of state and federal political party changes and market factors on the number of state oil and natural gas drilling permits issued. The findings, using a first-differenced empirical model for two samples, a 26-state sample, from 1990 to 2007, and a 19-state sample, from 1977 to 2007, indicate that the influence of political party changes is trumped by economic factors. Oil and natural gas prices are the main drivers of permitting changes, while the state and federal political party changes for the legislatures' and executive offices are consistently not significant. © 2012 Elsevier B.V.