Petroleum Economics

ECN420 Petroleum Economics

Spring 2020

  • 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


    Upon successful completion the student

    • can demonstrate to have knowledge of the global markets for oil and natural gas and their organization, and how this is affected by environmental and climate policies.
    • can demonstrate to have the knowledge of the economic concepts underlying petroleum production and use.
    • can demonstrate to have the understanding of the main principles of petroleum taxation and know the main components of the Norwegian petroleum taxation system and their roles.
    • will have a critical and reflective understanding of the predictive power of the theories introduced in the course.


    Upon successful completion the student can

    • formulate and analyze economic models of resource depletion and market competition, both analytically and empirically.
    • discuss the major events and developments in the history of the petroleum industry, and the development of the price of oil up until today.
    • explain how local, regional, and global policies and institutions affect energy markets and prices.

    General competence

    upon successful completion the student can

    • develop advanced technical skills, analytical decision making and problem solving.

  • Teaching

    Plenary lectures, group work, and homework assignments.

  • Recommended prerequisites

    Intermediate microeconomics and a basic knowledge of calculus recommended.

  • 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

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

  • Assessment

    A four-hour, written school exam. Weight: 100%. 

  • Grading Scale

    Grading scale A - F.

  • Computer tools

    Text editor, spreadsheet.

  • Literature

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


ECTS Credits
Teaching language

Spring. Offered spring 2020.

Course responsible

Professor II Corbett Grainger, Department of Economics.