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Working Paper
Reasons Behind Words: OPEC Narratives and the Oil Market
We analyze the content of the Organization of the Petroleum Exporting Countries (OPEC) communications and whether it provides information to the crude oil market. To this end, we derive an empirical strategy which allows us to measure OPEC's public signal and test whether market participants find it credible. Using Structural Topic Models, we analyze OPEC narratives and identify several topics related to fundamental factors, such as demand, supply, and speculative activity in the crude oil market. Importantly, we find that OPEC communication reduces oil price volatility and prompts market ...
Working Paper
Optimal Second-best Menu Design: Evidence from Residential Electricity Plans
Utilities increasingly sell electricity using complex menus of time-constant and time-varying price schedules. We study how to design such a menu to maximize social welfare in a second-best environment where the marginal private and external costs of generating electricity vary over time, institutional constraints prevent mandating time-varying pricing and consumer behavior is distorted by frictions. We develop a model of plan choice, consumption and intertemporal substitution with time-varying marginal social costs and estimate it using administrative data from a large utility. We provide ...
Working Paper
Smooth Operator? Managing Electric Vehicle Integration in Constrained Distribution Networks
Electricity distribution network constraints may ultimately limit the pace of transportation electrification. This paper examines the underappreciated challenges that electric vehicle (EV) adoption poses for the distribution grid. While prior research has focused on bulk power and private service upgrades, we emphasize how local distribution capacity is strained by reduced load diversity at small aggregations. We highlight two alternatives to costly infrastructure expansion: (1) demand-based tariffs that allocate scarce distribution capacity more efficiently, and (2) managed charging programs ...
Working Paper
The Electric Ceiling: Limits and Costs of Full Electrification
Electrification is a centerpiece of global decarbonization efforts. Yet there are reasons to be skeptical of the inevitability, or at least the optimal pace, of the transition. We discuss several under-appreciated costs of full, or even deep, electrification. Consumer preferences can operate in favor of and in opposition to electrification goals; and electrification is likely to encounter physical and economic obstacles when it reaches some as-yet-unknown level. While we readily acknowledge the external benefits of decarbonization, we also explore several under-appreciated external costs. The ...
Working Paper
Investing in the Batteries and Vehicles of the Future: A View Through the Stock Market
A large number of companies operating in the EV and battery supply chain have listed on a U.S. stock exchange in recent years. I compile a unique data set of high-frequency stock returns for those companies and investigate the extent to which an “industry” factor specific to the EV and battery supply chain (an “EV” factor) can explain their returns. Those returns are decomposed into systematic and idiosyncratic components, with the former given by a set of latent factors extracted from a large panel of stock returns using high-frequency principal components. It is found that a market ...
Working Paper
The Moderating Role of Green Energy and Energy-Innovation in Environmental Kuznets: Insights from Quantile-Quantile Analysis
The recent environmental challenges in Africa that emanated from global warming, human activity, limited access to electricity and overexploitation of natural resources have contributed to the growth of carbon dioxide (CO2) emissions in the region. This paper empirically investigates the moderating role of green energy consumption and energy innovation in the environmental Kuznets curve for the Sub-Saharan African (SSA) region using data spanning from 1980 to 2018. Our threshold model found that at least 54 percent of the population needs access to energy innovation before the region could be ...