Drilling For Oil: Deeper Issues Drive Firms' Behavior

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Executive Summary

Though Republicans and Democrats find ways to make more drilling possible by opening up previously restricted areas, the actual decision by a firm whether to drill or not matters too. The policy "Drill, baby, drill" may have a few unexpected nuances that petroleum and gas exploration firms control. New research by Professors James Smith and Rex Thompson of SMU Cox explores the question of why, rather than diversifying their exploration efforts, oil and gas firms tend to "Plunge" and concentrate their portfolios of assets in like exploration prospects such as a "Play" that contains common geological or risk factors.

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