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What Oil Export Levels Should We Expect From OPEC?

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  • Dermot Gately

Abstract

We analyze the levels of oil exports that should be expected from OPEC over the next 25 years. We search for a long-term, market-adaptive, robustly optimal strategy that best serves OPEC's interests, and conclude that OPEC export profits will be higher if OPEC expands its oil exports by enough to maintain OPEC exports share of non-OPEC demand. Yet the incentives for this export expansion are relatively small only a few percent in terms of discounted export profits and it requires that OPEC be farsighted, because the higher export profits from faster export growth wonot be significant within the next decade. Moreover, if OPEC does maintain its exports share of non-OPEC demand, the continued rapid growth of OPEC's own oil consumption will require that OPEC oil output will have to increase 60% by 2030, which will be a major challenge.

Suggested Citation

  • Dermot Gately, 2007. "What Oil Export Levels Should We Expect From OPEC?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 151-174.
    • Handle: RePEc:aen:journl:2007v28-02-a07
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    Cited by:

    1. Adetutu, Morakinyo O., 2014. "Energy efficiency and capital-energy substitutability: Evidence from four OPEC countries," Applied Energy, Elsevier, vol. 119(C), pages 363-370.
    2. Kaushik Ranjan Bandyopadhyay, 2022. "Oil and Gas Markets and COVID-19: A Critical Rumination on Drivers, Triggers, and Volatility," Energies, MDPI, vol. 15(8), pages 1-21, April.
    3. Kaufmann, Robert K. & Shiers, Laura D., 2008. "Alternatives to conventional crude oil: When, how quickly, and market driven?," Ecological Economics, Elsevier, vol. 67(3), pages 405-411, October.
    4. James L. Smith, 2009. "World Oil: Market or Mayhem?," Journal of Economic Perspectives, American Economic Association, vol. 23(3), pages 145-164, Summer.
    5. Aune, Finn Roar & Mohn, Klaus & Osmundsen, Petter & Rosendahl, Knut Einar, 2010. "Financial market pressure, tacit collusion and oil price formation," Energy Economics, Elsevier, vol. 32(2), pages 389-398, March.
    6. Wirl, Franz, 2015. "Output adjusting cartels facing dynamic, convex demand under uncertainty: The case of OPEC," Economic Modelling, Elsevier, vol. 44(C), pages 307-316.
    7. Ratti, Ronald A. & Vespignani, Joaquin L., 2015. "OPEC and non-OPEC oil production and the global economy," Energy Economics, Elsevier, vol. 50(C), pages 364-378.
    8. Benjamin Wong, 2013. "Inflation Dynamics and The Role of Oil Shocks: How Different Were the 1970s?," CAMA Working Papers 2013-59, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    9. Trevor Houser & Shashank Mohan, 2011. "America’s Energy Security Options," Policy Briefs PB11-10, Peterson Institute for International Economics.
    10. Somayeh Azami & Shahram Fattahi & Mehdi Rezaei, 2017. "Historical and Variance Decomposition for Oil Price, Oil Consumption, OPEC and Non-OPEC Oil Production," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 21(3), pages 519-541, Summer.
    11. Brown, Stephen P.A. & Huntington, Hillard G., 2017. "OPEC and world oil security," Energy Policy, Elsevier, vol. 108(C), pages 512-523.
    12. Pål Boug & Ådne Cappelen & Anders Rygh Swensen, 2016. "Modelling OPEC behaviour. Theory and evidence," Discussion Papers 843, Statistics Norway, Research Department.
    13. Kaufmann, Robert K. & Ullman, Ben, 2009. "Oil prices, speculation, and fundamentals: Interpreting causal relations among spot and futures prices," Energy Economics, Elsevier, vol. 31(4), pages 550-558, July.
    14. Wie, Jiegen & Wennlock, Magnus & Johansson, Daniel J.A. & Sterner, Thomas, 2011. "The Fossil Endgame: Strategic Oil Price Discrimination and Carbon Taxation," RFF Working Paper Series dp-11-26, Resources for the Future.

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    JEL classification:

    • F0 - International Economics - - General

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