Gaëtan Fournier: gaetan.fournier[at]univ-amu.fr
Climate action will decrease the profitability of oil exploitation, reducing the amount of economically viable oil reserves. We propose and examine a measure for the vulnerability of oil companies' economic reserves to the oil price. First, we present a testable decomposition of the effect of the oil price on oil companies' profits that captures the RSP. Second, we test this relation, providing new evidence that markets take into account the effect of the oil price on economic oil reserves. Third, we estimate our RSP metric directly from fundamental data on companies' reserves.