Matthew Cronin, Ph.D.
"Nonparametric Benchmarking of Natural Gas Pipelines: Changes in Productivity and Efficiency of Natural Gas Pipelines During The Shale Revolution" (Online Appendix) (Job Market paper)
This paper uses nonparametric methods to estimate changes in efficiency and productivity of natural gas pipelines in the U.S. during the period of shale gas expansion during 2007–2018. This period, known as the Shale Revolution, saw an increase in shale gas production from less that 5 billion cubic feet per day (BCF/d) in 2007 to over 60 BCF/d in 2018. This increase in production coincides with increases in capacity and infrastructure improvements to the transportation network of natural gas pipelines. Previous research in energy economics has ignored changes in efficiency and productivity of natural gas pipelines during the Shale Revolution. However, I find strong evidence of increases in the technical efficiency and productivity of pipelines during this period. In addition, the estimates suggest that the production set for natural gas pipelines is convex and does not exhibit constant returns to scale.
This paper uses nonparametric methods to estimate changes in productivity and efficiency of major electric utilities in the U.S. during 2001–2019. Starting in 2007, an increased supply of natural gas resulted in large-scale adoption of natural gas fueled energy production as well as an overall increase in installed generating capacity. Data on major electric utilities collected by the Federal Energy Regulatory Commission indicate that the overall installed generating capacity of utilities increased by 13 percent during 2001–2013, with an increasing share of capacity coming from plants fueled by natural gas. However, this increase in capacity coincides with a decrease in the growth of utility-scale electricity consumption and a 12 percent decrease in utility energy generation. The evidence suggests a decline in the productivity of electric utilities during the sample period. In addition, using modern nonparametric techniques reveals a decrease in mean technical efficiency of utilities during the period of decline in energy generation. Finally, other modern nonparametric tests show that the production frontier of electric utilities changes depending on the production year and share of natural gas fueled generating capacity a utility has out of their total capacity. These results indicates that nonparametric efficiency estimates should be conditional on time and the share of natural gas fueled generating capacity.