Empirical evidence for the superiority of non-US oil and gas investments

This paper provides empirical estimates of the return on US and non-US expl oration investment. The estimates are obtained from a polynomial distribute d lag model [Econometrica 33 (1965) 178] that relates the present value of current period reserve discoveries to current and lagged US and non-US expl oration investment. The empirical evidence presented in the paper indicates that the net present value of $1 invested in non-US exploration is larger in a statistically significant sense than the net present value of $1 inves ted in U.S exploration. In particular, results indicate that the return on non-US exploration investment is approximately 3.5 times as large as the re turn earned on US exploration investment. The results reported in this pape r provide insights potentially useful to US energy policymakers. (C) 2001 E lsevier Science B.V. All rights reserved.