The oil extraction puzzle: theory and evidence
AbstractThis paper considers the relationship between the extraction rates and remaining reserves of a non-renewable resource. Under general conditions the derived extraction rule is firstly linear, and secondly exhibits a slope term common to all extractors regardless of pricing behaviour and costs whilst differences are captured by the intercept. Data from the world oil industry supports the hypothesis of linearity but the implied test was rejected in some cases. Latterly, it appears that either OPEC members are discounting at a higher rate than the competitive fringe or they are overstating their reserve levels.
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Bibliographic InfoPaper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2003 with number 166.
Date of creation: 04 Jun 2003
Date of revision:
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oil; OPEC; extraction; reserves; resources;
Other versions of this item:
- N5 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries
- Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-06-16 (All new papers)
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