The Economics of Petroleum and the Energy Transition

ENE478 The Economics of Petroleum and the Energy Transition

Autumn 2024

Spring 2024
  • Topics

    This course explores the economics of petroleum, energy markets, and the ongoing energy transition from fossil fuels to renewables. The course offers an in-depth understanding of energy market structures, the role of petroleum, the shift toward more sustainable energy sources, the impact of climate change, and the management of petroleum wealth, with special emphasize on the Norwegian experience. Through interactive lectures, case studies and discussions, supported by pre-recorded learning videos, you'll gain a comprehensive understanding of the following main topics:

    • Introduction to petroleum and energy markets: The history of petroleum and petroleum markets, the current state of petroleum and energy markets, energy and the world economy, the renewable energy transition.
    • Modeling petroleum production and markets: Economic models of petroleum production from a field, oil market theories and the Hotelling rule, natural gas markets.
    • Energy, emissions, and global warming: Environmental regulations, emissions and carbon pricing, policies for decarbonizing the transportation sector, climate risk and stranded assets.
    • Petroleum management and resource taxation: Petroleum management in Norway and other petroleum-rich countries, management objectives, governance, resource rent taxation, the Norwegian petroleum tax system. Macroeconomic implications of the green transition for petroleum-dependent countries.
    • Management of petroleum wealth: Mineral wealth funds, the resource curse, Dutch disease.

    This course is designed for students interested in the macroeconomic, environmental, and policy aspects of the energy sector. Whether you are aiming for a career in energy or related industries, policymaking or research, this course will equip you with the critical insights and analytical skills needed to navigate the complexities of today's energy landscape.

  • Learning outcome

    Upon completion of the course, the student can…


    • understand global oil and gas markets and how energy markets are affected by environmental and climate policies.
    • explain the interplay between geopolitical factors and energy markets, and how this influences global energy markets and sustainability.
    • describe the main principles for petroleum management in Norway, including the petroleum taxation system and petroleum wealth management.
    • assess the predictive power of theories introduced in the course.


    • formulate and analyze economic models of resource depletion and market competition dynamics.
    • utilize data analysis tools to interpret market data, assessing market trends and modelling the impact of policy changes on energy projects and markets.
    • discuss major events and trends shaping the global energy markets through time, including both historical and contemporary developments.
    • assess the driving forces behind the global energy transition and analyze its implications for non-renewable and renewable energy sources.
    • identify and appraise the primary risks and opportunities associated with environmental sustainability within the energy sector.

    General competence

    • communicate complex energy and economic concepts effectively to diverse audiences, including both specialists and non-specialists, industry professionals and policymakers.
    • apply insights from Norway's approach to petroleum management and the energy transition in a global context.
    • update and refine knowledge and skills in response to new developments in global energy markets, thereby enhancing their decision-making and problem-solving capacity.

  • Teaching

    The course uses a flipped-classroom approach, where learning videos are made available to students online throughout the semester, while most of the in-class time is dedicated to interactive learning activities, such as discussions, problem solving, and case studies. Lectures (in-class time) will be a combination of (mainly) physical meetings and (some) Zoom meetings.

  • Recommended prerequisites

    A basic understanding of calculus and intermediate concepts in microeconomics and macroeconomics is beneficial.

  • Credit reduction due to overlap

    ENE478 cannot be taken in combination with the following courses due to overlap:

    • ENE467 Energy and Climate Policy
    • ENE475 Natural Gas Markets
    • ECN420 The Economics of Petroleum and the Energy Transition

  • Assessment

    There are two forms of assessment in the course, which are weighted equally; a portfolio that students work on during the semester, and a final exam at the end of the semester:

    1. Portfolio of homework assignments and in-class quizzes:
      • Homework assignments: Students will be given three homework assignments over the semester, between August and November. There will be at least two weeks to solve each assignment. Students must turn in at least two homework assignments, either alone or in groups of 2-3 students, and each student’s two best homework scores will count towards the final grade (75% of portfolio grade).
      • In-class quizzes: Students will be given a short individual quiz in every lecture, and each student’s seven best results over the semester will count toward the final grade (25% of portfolio grade). Quizzes not taken will receive a zero score. 
    2. Final exam: A 3-hour individual digital school exam at the end of the semester.

    The portfolio and final exam must be written in English.

  • Grading Scale


  • Computer tools

    Some use of data analysis software such as Excel, Python, R or Stata.

  • Literature

    Selected book chapters and articles from academic journals (some mandatory, some recommended), including but not limited to:

    • Hannesson, R. (1998). Petroleum economics: issues and strategies of oil and natural gas production. Westport, Conn.: Quorum. [Selected chapters] Chapters 1, 3, 5-7
    • Karp, L. (2017). Natural resources as capital. Cambridge MA: MIT Press. [Selected chapters] Chapters 3-7.
    • Allcott, H., & Knittel, C. (2019). Are consumers poorly informed about fuel economy? Evidence from two experiments. American Economic Journal: Economic Policy11(1), 1-37.
    • Atanasova, C., & Schwartz, E. S. 2019. Stranded fossil fuel reserves and firm value (No. w26497). National Bureau of Economic Research.
    • Anderson, M.L. and Aufhammer, M. 2014. Pounds that kill: The external costs of vehicle weight. Review of Economic Studies 81(2): 535-571.
    • Anderson, S.T., R. Kellogg & S.W. Salant. 2018. Hotelling under pressure. Journal of Political Economy 126(3): 984-1026.
    • Covert, T, M. Greenstone & C.R. Knittel. 2016. Will we ever stop using fossil fuels? Journal of Economic Perspectives 30(1): 117-138.
    • Baumeister, C. & L. Kilian. 2016. Forty years of oil price fluctuations: Why the price of oil may still surprise us. Journal of Economic Perspectives 30(1): 139-160.
    • Bento, A.M., M.R. Jacobsen, C.R. Knittel, and A.A. Van Benthem. 2020. Estimating the Costs and Benefits of Fuel-Economy Standards. Environmental and Energy Policy and the Economy, 1, 129-157.
    • Boadway, R., & Keen, M. 2015. Rent taxes and royalties in designing fiscal regimes for nonrenewable resources. In Handbook on the Economics of Natural Resources. Halvorsen, R. and Layton, D.F. (eds.). Edward Elgar Publishing.
    • Christophers, B. 2022. Fossilised Capital: Price and Profit in the Energy Transition, New Political Economy, 27:1, 146-159.
    • Gaudet, G. and P. Lasserre. 2015. The taxation of nonrenewable natural resources. Chapter 4 in Handbook on the Economics of Natural Resources, Halvorsen, R. and Layton, D.F. (eds.). Edward Elgar Publishing.
    • Heal, G. 2022. Economic aspects of the energy transition. Environmental and Resource Economics, 83, 5-21.
    • Jakob, M., & Hilaire, J. (2015). Climate science: Unburnable fossil-fuel reserves. Nature, 517(7533), 150-152.
    • Knittel, C.R. 2012. Reducing petroleum consumption from transportation. Journal of Economic Perspectives 26(1): 93-118.
    • Livernois, J. 2009. On the empirical significance of the Hotelling rule. Review of Environmental Economics and Policy 3(1): 22-41.
    • Lund, D. 2014. State participation and taxation in Norwegian petroleum: Lessons for others? Energy Strategy Reviews 3: 49-54.
    • NOU 2018:17. Climate risk and the Norwegian economy, English summary. Available at:
    • Sandler, R. 2012. Clunkers or Junkers? Adverse Selection in a Vehicle Retirement Program. American Economic Journal: Economic Policy 4(4): 253-281.
    • van den Bremer, T., F. van der Ploeg, and S. Wills. 2016. The elephant in the ground: Managing oil and sovereign wealth. European Economic Review 82: 113-131.
    • van der Ploeg, F. 2011. Natural resources: curse or blessing? Journal of Economic Literature 49(2): 366-420.
    • van der Ploeg, F., & Rezai, A. 2020. The risk of policy tipping and stranded carbon assets. Journal of Environmental Economics and Management, 100, 102258.

    In addition: Selected reports.

  • Permitted Support Material


    One bilingual dictionary (Category I) 

    All in accordance with Supplementary provisions to the Regulations for Full-time Study Programmes at the Norwegian School of Economics Ch.4 Permitted support material and  


ECTS Credits
Teaching language

Autumn. Offered autumn 2024.

ENE478 replaced ECN420 from autumn 2023.

Course responsible

Professor Linda Nøstbakken, Department of Economics.