Economic Theory and the Supply of Oil
AbstractThis paper is concerned with four things. First, establishing the importance of the reserve-production ratio, and its significance relative to the 'life' of the oil reserves. Next, providing a simple derivation and discussion of Hotelling's theorem, while claiming its inadequacy for discussing physical as compared to financial assets. I then consider the short term pricing of oil presenting a simplified exposition of the 'convenience yield', and the part it plays in the term structure of oil prices. Finally, I take a look at a recent argument which claims that in reality there will not be an increased dependence of Middle East oil in the near or distant future. There is also a short conclusion in which some forecasts of the demand for oil in the years 2000 and 2010 are given.
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Bibliographic InfoPaper provided by Uppsala University, Department of Economics in its series Working Paper Series with number 1997:22.
Length: 25 pages
Date of creation: 15 Aug 1998
Date of revision:
Contact details of provider:
Postal: Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden
Phone: + 46 18 471 25 00
Fax: + 46 18 471 14 78
Web page: http://www.nek.uu.se/
More information through EDIRC
Reserve-produduction ratio; hotelling; convenience yield; oil reserves;
Find related papers by JEL classification:
- Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
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