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The future of oil: Geology versus technology

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  • Benes, Jaromir
  • Chauvet, Marcelle
  • Kamenik, Ondra
  • Kumhof, Michael
  • Laxton, Douglas
  • Mursula, Susanna
  • Selody, Jack

Abstract

We discuss and reconcile the geological and economic/technological views concerning the future of world oil production and prices, and present a nonlinear econometric model of the world oil market that encompasses both views. The model performs far better than existing empirical models in forecasting oil prices and oil output out-of-sample. Its point forecast is for a near doubling of the real price of oil over the coming decade, though the error bands are wide, reflecting sharply differing judgments on the ultimately recoverable reserves, and on future price elasticities of oil demand and supply.

Suggested Citation

  • Benes, Jaromir & Chauvet, Marcelle & Kamenik, Ondra & Kumhof, Michael & Laxton, Douglas & Mursula, Susanna & Selody, Jack, 2015. "The future of oil: Geology versus technology," International Journal of Forecasting, Elsevier, vol. 31(1), pages 207-221.
  • Handle: RePEc:eee:intfor:v:31:y:2015:i:1:p:207-221
    DOI: 10.1016/j.ijforecast.2014.03.012
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    References listed on IDEAS

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    8. Michael Kumhof & Dirk V Muir, 2012. "Oil and the World Economy; Some Possible Futures," IMF Working Papers 12/256, International Monetary Fund.
    9. James D. Hamilton, 2014. "The Changing Face of World Oil Markets," NBER Working Papers 20355, National Bureau of Economic Research, Inc.
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