Petroleum Economics

ECN420 Petroleum Economics

  • Topics


    The course consists of five parts: (i) Introduction to petroleum markets, (ii) Oil market theories, (iii) Petroleum taxation and wealth management, (iv) Energy and the environment, and (v) Natural gas markets. Part (i) gives an overview of petroleum markets today, including resource allocation, production, trade, and the role of energy in the world economy. This part also gives the historical perspective. Part (ii) presents theories to model the oil market. We consider different market structures, such as perfect competition, monopoly, and price leadership. In part (iii), we discuss the basic principles of petroleum taxation and investigate the Norwegian petroleum taxation system and its development. This part also looks at the management of petroleum wealth. Part (iv) deals with how climate change and climate regulations might affect energy markets. We introduce some concepts from environmental economics, look at carbon pricing, and we consider transportation markets, such as how recent fuel-efficiency and emissions reductions policies affect energy use in the transportation sector. Finally, part (v) looks at the natural gas market. In this part, we focus on ways in which natural gas differs from oil, and how these differences affect their respective markets.

  • Learning outcome

    Learning outcome

    The course focuses on the economics of the petroleum industry and energy markets. It combines a historical and descriptive approach, with analytical modeling and analyses.

    The course will enable students to:

    • Be familiar with the global markets for oil and natural gas and their organization
    • Understand basic economic concepts underlying petroleum production and use
    • Discuss major events and developments in the history of the petroleum industry, and the development of the price of oil up until today
    • Formulate and analyze simple economic models of resource depletion and market competition, both analytically and empirically
    • Explain how local, regional, and global policies and institutions affect energy markets and prices
    • Understand the interaction between petroleum and other energy resources in the market, and how this is affected by environmental and climate policies
    • Understand the main principles of petroleum taxation and what it implies to have a neutral tax system
    • Know the main components of the Norwegian petroleum taxation system and their roles

  • Teaching


    Plenary lectures, video recordings, group work, and homework assignments.

  • Required prerequisites

    Required prerequisites

    Intermediate microeconomics and a basic knowledge of calculus recommended.

  • Credit reduction due to overlap

    Credit reduction due to overlap

    This course is the same as SAM460, and you will not get credit for both courses.

  • Requirements for course approval

    Requirements for course approval

    To obtain course approval, which is required to write the final exam, students must receive a ¿pass¿ on at least three written homework assignments during the semester.

  • Assessment


    Exam: A three-hour, written exam. Grading scale: A-F. Weight: 70%. Term paper. Grading scale: A-F. Weight: 30%.

    In order to retake the exam you should register for ECN420EKS or ECN420OPPG. Please note that this only applies of you have taken the course before.

  • Grading Scale

    Grading Scale

    Grading scale A - F.

  • Computer tools

    Computer tools

    Text editor, spreadsheet.

  • Semester



  • Literature


    • Textbook: Hannesson, R. "Petroleum Economics. Issues and Strategies." Quorum Books, 1998.
    • Journal articles: Selected papers from academic journals.


ECTS Credits

Course responsible

Yuanhao Jack Li, Department of Economics.