Conservation and economic efficiency Alberta oil proration

Since 1950, Alberta oil production has been governed by production quotas, called proration. The nature and degree of the impact of proration on production efficiency is evaluated by applying a reservoir investment model and by comparing realized with minimum output costs. The main finding is that proration encouraged excessive investment in reservoirs of certain characteristics. The resulting substantial surplus investment would have been greater in the absence of other government regulations. The form of proration is important: earlier introduction of later measures would have produced significant savings.