Effect of US Policies on Offshore Oil Leasing, 1983-2006: A Random Parameter Logit Regression Analysis

The purpose of this study is to determine the effects of Minerals Management Service policy on Outer Continental Shelf leasing between 1983 and 2006. We apply a discrete choice model to a large, recently-developed spatial data set and focus on the effect of increased royalties on offshore production. We focus on offshore policies subsequent to 1983 with a flexible Random Parameters Logit model. Oil prices, net income, distance, geographical proxies and weather variables influence bidding in expected ways. We include the second moment of parameter distributions to avoid erroneous conclusions about the effects of government policy on bidding. Key Words: Random Parameter Logit, Oil Policy, Outer Continental Shelf