Publications:
Global carbon budgets and the viability of new fossil fuel projects (Climatic Change, 2018)
with: Mark Jaccard and James Hoffele
Policy-makers of some fossil fuel-endowed countries wish to know if a given fossil fuel supply project is consistent with the global carbon budget that would prevent a 2 °C temperature rise. But while some studies have identified fossil fuel reserves that are inconsistent with the 2 °C carbon budget, they have not shown the effect on fossil fuel production costs and market prices. Focusing on oil, we develop an oil pricing and climate test model to which we apply future carbon prices and oil consumption from several global energy-economy-emissions models that simulate the energy supply and demand effects of the 2 °C carbon budget. Our oil price model includes key oil market attributes, notably upper and lower market share boundaries for different oil producer categories, such as OPEC. Using the distribution of the global model results as an indicator of uncertainty about future carbon prices and oil demand, we estimate the probability that a new investment of a given oil source category would be economically viable under the 2 °C carbon budget. In our case study of Canada’s oil sands, we find a less than 5% probability that oil sands investments, and therefore new oil pipelines, would be economically viable over the next three decades under the 2 °C carbon budget. Our sensitivity analysis finds that if OPEC agreed to reduce its market share to 30% by 2045, a significant reduction from its steady 40–45% of the past 25 years, then the probability of viable oil sands expansion rises to 30%.
Working Papers:
While the consumer gains from international trade are often measured at the border, whether all domestic consumers gain equal access to the imports recorded in customs data remains a mystery. This paper provides novel evidence that geographically disparate stores of the same U.S. grocery retail chain are surprisingly similar in the imports they stock. Proximal stores belonging to different chains exhibit no such similarity. By leveraging household import expenditure data and the recent expansion of dollar stores, I show that persistent within-chain import sourcing has plausibly causal effects on the distribution of imports across domestic consumers: every new dollar store increases local expenditure on Chinese grocery exports by 26%. When compared to estimates of the elasticities governing international trade, each dollar store effectively reduces the distance between local consumers and Chinese producers by 850 miles. Consumer access to foreign producers is therefore mediated by local retail markets, and vice versa.
Who buys imports? By augmenting U.S. grocery purchase data to include origin countries of both products and households, we provide the first evidence that immigrants exhibit substantially stronger preferences for imported consumer goods than natives. We develop and estimate a quantitative trade model to show that immigrants also reduce trade costs and expand the effective market size for foreign goods, thereby increasing local import supply for all households. Overall, however, immigrants generate considerably more local import expenditure via their own purchases than via spillovers to natives, with profound implications for the distributional costs of a negative trade shock, such as an import tariff: the average within-county difference in welfare costs between immigrants and natives is over six times the across-county standard deviation in native household costs.
Tariff Pass-through and Substitution: Barcode-Level Evidence from the US-China Trade War (draft coming soon)
with: Liang Bai and Sebastian Stumpner
Tariffs and Pipelines: Evaluating Canada's Pipeline Infrastructure under U.S. Tariff Uncertainty
Revise and resubmit: Energy Economics
with: Jotham Peters
Media: The Conversation Canada
This paper evaluates the extent to which additional Canadian pipeline infrastructure might mitigate the cost of potential U.S. tariffs on crude oil exports. We generate three key findings via a highly disaggregated computable general equilibrium model of the North American crude petroleum industry. (1) Under the existing pipeline network, a 10% tariff applied by the U.S. generates an annual export revenue loss of $10.8B for Canadian crude producers. (2) If previously canceled east-west pipelines (Energy East and Northern Gateway) were operating at full capacity, tariff costs would be reduced by 40% and the tariff elasticity of substitution away from the U.S. market would effectively quadruple. (3) To fully insulate producers from U.S. tariffs, pipeline capacity to tidewater would have to expand by a factor of 4.5. Tariff pass-through to U.S. refineries is effectively non-existent under the existing pipeline network, reflecting a lack of access to non-U.S. export markets for Canadian crude. When previously canceled pipelines are operational, however, pass-through increases to 20%-30%. After only five years of tariffs, the net benefit of canceled pipelines effectively covers the cost of construction, even under pessimistic construction cost assumptions.
This paper links product country-of-origin data to US household purchase records and estimates a model of import demand with flexible consumer heterogeneity and attribute-based import substitution patterns. Counterfactual price shocks applied to all imported varieties reveal concentrated costs in urban US counties, while China-specific price shocks are strongly anti-rural. I provide evidence that differences in retail market composition drive these disparate outcomes by acting both in addition to, and independently of, household income. I provide evidence that import substitutability is greater than under typical Armington assumptions and justify the modeling choice of this paper by providing evidence that variety attributes – such as quality and markups – are highly separable between the location of production and the firm which designed that variety.