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Oil Price Developments: Drivers, Economic Consequences and Policy Responses

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  • Anne-Marie Brook
  • Robert W.R. Price
  • Douglas Sutherland
  • Niels Westerlund
  • Christophe André

Abstract

This paper analyses the factors influencing the price of oil and its likely evolution over the next quarter century. It begins by investigating the fundamental forces shaping long-term oil price developments, highlighting the importance of growth-led demand for oil, particularly that emanating from fast-growing, energy-intensive developing countries, and the implications of increasingly geographically concentrated oil reserves. The paper presents oil price projections to 2030 and examines the sensitivity of the projections to the assumptions about growth and non-OPEC supply. While certain combinations of factors could lead to a significantly higher oil price, the projections also suggest that the optimal strategy of resource-rich oil producers would be to prevent it rising too far. The paper then documents short-term influences on the oil price, which peaked at $50 a barrel in 2004, and notes that they have probably led to a significant departure from the long-run equilibrium price ... Ce document analyse les facteurs qui influencent le prix du pétrole et son évolution probable au cours du prochain quart de siècle. Il examine d’abord les déterminants fondamentaux de l’évolution des prix du pétrole à long terme, en soulignant l’importance de la demande pétrolière alimentée par la croissance, en particulier celle émanant des pays en développement à forte intensité d’énergie et en expansion rapide, ainsi que les conséquences de la concentration géographique croissante des réserves pétrolières. Le document présente des prévisions des prix du pétrole jusqu’à l’horizon 2030 et évalue leur sensibilité aux hypothèses concernant la croissance et l’offre hors OPEP. Tandis que certaines combinaisons de facteurs pourraient se traduire par un prix du pétrole nettement plus élevé, les prévisions montrent aussi que pour les producteurs pétroliers dotés d’abondantes réserves la stratégie optimale consisterait à empêcher une hausse excessive des cours. L’étude décrit ensuite les ...

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File URL: http://dx.doi.org/10.1787/303505385758
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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 412.

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Date of creation: 08 Dec 2004
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Handle: RePEc:oec:ecoaaa:412-en

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Keywords: market structure; crude oil; energy; énergie; pétrole brut; structure de marché;

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Cited by:
  1. Rolf Golombek & Alfonso A. Irarrazabal & Lin Ma, 2013. "OPEC's Market Power: An Empirical Dominant Firm Model for the Oil Market," CESifo Working Paper Series 4512, CESifo Group Munich.
  2. Klaus DESMET & Esteban ROSSI-HANSBERG, 2013. "On the Spatial Economic Impact of Global Warming," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 13057, Research Institute of Economy, Trade and Industry (RIETI).
  3. James L. Smith, 2009. "World Oil: Market or Mayhem?," Journal of Economic Perspectives, American Economic Association, vol. 23(3), pages 145-64, Summer.
  4. Douwe Kingma & Wim Suyker, 2004. "FAQs about oil and the world economy," CPB Memorandum, CPB Netherlands Bureau for Economic Policy Analysis 104, CPB Netherlands Bureau for Economic Policy Analysis.
  5. Möbert, Jochen, 2007. "Crude Oil Price Determinants," Darmstadt Discussion Papers in Economics 35713, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute of Economics (VWL).

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