We show that oil production from existing wells in Texas does not respond to price incentives. Drilling activity and costs, however, do respond strongly to prices. To explain these facts, we reformulate Hotelling's (1931) classic model of exhaustible resource extraction as a drilling problem:...

We show that oil production from existing wells in Texas does not respond to price incentives. Drilling activity and costs, however, do respond strongly to prices. To explain these facts, we reformulate Hotelling's (1931) classic model of exhaustible resource extraction as a drilling problem:...

The paper discusses the role of crude oil prices as an important cost factor for individual and collective mobility. After a short introduction, there will be three further sections. Section 2 covers a general discussion of the relevance of oil today and also several scenarios for the future...