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The FPC Staff's Econometric Model of Natural Gas Supply in the United States

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  • J. Daniel Khazzoom

Abstract

The main emphasis in this study is on gas discoveries. They constitute the propelling force behind gas supply, and of the two broad relationships for which results are reported here - namely, discoveries and extensions and revisions - gas discovery is (qualitatively) the more important. Estimates for 1961-68 and 1961-69 discoveries are reported for a dynamic model, using time series of cross sections. Estimation is done first for a one-intercept model. Alternatively, the units (districts) are grouped by geological and geophysical characteristics, and estimates are derived for the grouped-districts model. This model yields generally better results. The inclusion of 1969 in the sampled period does not alter the results reported for 1961-68, and the discussion centers on the 1961-69 estimates. Conditional forecasts of 1970 discoveries indicate a drop of one-fifth to one-fourth of 1969 discoveries. The time path of the response of discoveries to the ceiling price of gas is examined, and simulation results for gas discoveries under alternative assumptions about the ceiling price of gas are reported. A procedure for combining the simulation results with available information on future gas requirements is developed to help the FPC in deciding on an appropriate level for the ceiling price of gas. Some policy implications are discussed.

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  • J. Daniel Khazzoom, 1971. "The FPC Staff's Econometric Model of Natural Gas Supply in the United States," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 51-93, Spring.
    • Handle: RePEc:rje:bellje:v:2:y:1971:i:spring:p:51-93
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    Citations

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    Cited by:

    1. Pagoulatos, Angelos & Debertin, David L. & Pagoulatos, Emilio, 1978. "Government Price Policies And The Availability Of Crude Oil," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 3(1), pages 1-16, July.
    2. Sterman, John & Richardson, George P. & Davidsen, Pål I., 1987. "Modeling the estimation of petroleum resources in the United States," Working papers 1900-87., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    3. Machiel Mulder & Arie ten Cate & Ali Aouragh & Joeri Gorter, 2004. "Gas exploration and production at the Dutch continental shelf: an assessment of the 'Depreciation at Will'," CPB Document 66, CPB Netherlands Bureau for Economic Policy Analysis.
    4. Machiel Mulder & Arie ten Cate & Ali Aouragh & Joeri Gorter, 2004. "Gas exploration and production at the Dutch continental shelf: an assessment of the 'Depreciation at Will'," CPB Document 66.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    5. Xu Zhao & Carol A. Dahl & Dongkun Luo, 2015. "How OECD countries subsidize oil and natural gas producers and modeling the consequences: A review with recommendations," Working Papers 2015-03, Colorado School of Mines, Division of Economics and Business.
    6. Zhao, Xu & Dahl, Carol A. & Luo, Dongkun, 2019. "How OECD countries subsidize oil and natural gas producers and modeling the consequences: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 104(C), pages 111-126.
    7. ten Cate, Arie & Mulder, Machiel, 2007. "Impact of the oil price and fiscal facilities on offshore mining at the Dutch Continental Shelf," Energy Policy, Elsevier, vol. 35(11), pages 5601-5613, November.
    8. Managi, Shunsuke & Opaluch, James J. & Jin, Di & Grigalunas, Thomas A., 2005. "Technological change and petroleum exploration in the Gulf of Mexico," Energy Policy, Elsevier, vol. 33(5), pages 619-632, March.
    9. Dahl, Carol & Duggan, Thomas E., 1998. "Survey of price elasticities from economic exploration models of US oil and gas supply," Journal of Energy Finance & Development, Elsevier, vol. 3(2), pages 129-169.

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