OPEC's Incentives for Faster Output Growth
AbstractThis paper addresses the question of whether OPEC producers are likely to expand their oil output substantially over the next two decades more than doubling in the Gulf countries by 2020. Such projections, made by the International Energy Agency (IEA) and the U.S. Department of Energy (DOE), are not based on behavioral analysis of Gulf countries decisions, but are merely the residual demand for OPEC oil the difference between projected world oil demand and Non-OPEC supply, given some assumed price-path. I employ a simulation model to compare OPEC s payoffs from faster or slower output growth, under various parametric assumptions about the responsiveness of world oil demand and Non-OPEC supply to income and price changes. The payoffs to OPEC are relatively insensitive to faster output growth; aggressive output expansion yields slightly lower payoffs than just maintaining current market share. Analysis of intra-OPEC decisions between the Core countries and the others suggests a similar conclusion: these two groups are engaged in a constant-sum game. Thus, the significant increases in OPEC output projected by IEA and DOE are implausible.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by International Association for Energy Economics in its journal The Energy Journal.
Volume (Year): Volume 25 (2004)
Issue (Month): Number 2 ()
Find related papers by JEL classification:
- F0 - International Economics - - General
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Wirl, Franz, 2008. "Energy conservation, expectations and uncertainty," Energy Economics, Elsevier, vol. 30(4), pages 1957-1972, July.
- Wirl, Franz, 2008. "Why do oil prices jump (or fall)?," Energy Policy, Elsevier, vol. 36(3), pages 1029-1043, March.
- Radoslaw Stefanski, 2010.
"Structural Transformation and the Oil Price,"
OxCarre Working Papers
048, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
- Radoslaw Stefanski, 2013.
"Online Appendix to "Structural Transformation and the Oil Price","
12-45, Review of Economic Dynamics.
- Greene, David L., 2010. "Measuring energy security: Can the United States achieve oil independence?," Energy Policy, Elsevier, vol. 38(4), pages 1614-1621, April.
- Leach, Andrew & Mason, Charles F. & Veld, Klaas van ‘t, 2011.
"Co-optimization of enhanced oil recovery and carbon sequestration,"
Resource and Energy Economics,
Elsevier, vol. 33(4), pages 893-912.
- Andrew Leach & Charles F. Mason & Klaas van't Veld, 2009. "Co-optimization of Enhanced Oil Recovery and Carbon Sequestration," NBER Working Papers 15035, National Bureau of Economic Research, Inc.
- Bassi, Andrea M. & Powers, Robert & Schoenberg, William, 2010. "An integrated approach to energy prospects for North America and the rest of the world," Energy Economics, Elsevier, vol. 32(1), pages 30-42, January.
- Correlje, Aad & van der Linde, Coby, 2006. "Energy supply security and geopolitics: A European perspective," Energy Policy, Elsevier, vol. 34(5), pages 532-543, March.
- Jochen Güntner, 2013. "How do oil producers respond to oil demand shocks?," Economics working papers 2013-11, Department of Economics, Johannes Kepler University Linz, Austria.
- Sorrell, Steve & Miller, Richard & Bentley, Roger & Speirs, Jamie, 2010. "Oil futures: A comparison of global supply forecasts," Energy Policy, Elsevier, vol. 38(9), pages 4990-5003, September.
- Chen, Xiaoguang & Huang, Haixiao & Khanna, Madhu & Önal, Hayri, 2014. "Alternative transportation fuel standards: Welfare effects and climate benefits," Journal of Environmental Economics and Management, Elsevier, vol. 67(3), pages 241-257.
- Hahn, Robert & Passell, Peter, 2010. "The economics of allowing more U.S. oil drilling," Energy Economics, Elsevier, vol. 32(3), pages 638-650, May.
- Lyudmyla Hvozdyk & Valerie Mercer-Blackman, 2010. "What Determines Investment in the Oil Sector?: A New Era for National and International Oil Companies," IDB Publications 9393, Inter-American Development Bank.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (David Williams).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.