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North American Natural Gas Supply Forecast: The Hubbert Method Including the Effects of Institutions

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  • Douglas B. Reynolds

    ()

    (Department of Economics, School of Management, University of Alaska Fairbanks, P.O. Box 756080, Fairbanks, AK 99775-6080; USA)

  • Marek Kolodziej

    ()

    (Center for Energy and Environmental Studies, Boston University, Boston, MA, USA)

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    Abstract

    In this article, the U.S. and southern Canadian natural gas supply market is considered. An important model for oil and natural gas supply is the Hubbert curve. Not all regions of the world are producing oil or natural gas following a Hubbert curve, even when price and market conditions are accounted for. One reason is that institutions are affecting supply. We investigate the possible effects of oil and gas market institutions in North America on natural gas supply. A multi-cycle Hubbert curve with inflection points similar to the Soviet Union’s oil production multi-cycle Hubbert curve is used to determine North American natural gas discovery rates and to analyze how market specific institutions caused the inflection points. In addition, we analyze the latest shale natural gas projections critically. While currently, unconventional resources of natural gas suggest that North American natural gas production will increase without bound, the model here suggests a peak in North American natural gas supplies could happen in 2013.

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    Article provided by MDPI, Open Access Journal in its journal Energies.

    Volume (Year): 2 (2009)
    Issue (Month): 2 (May)
    Pages: 269-306

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    Handle: RePEc:gam:jeners:v:2:y:2009:i:2:p:269-306:d:5072
    Contact details of provider: Web page: http://www.mdpi.com/

    Keywords: energy supply; Hubbert curve; institutional economics; regulated industries; natural gas;

    Find related papers by JEL classification:

    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q49 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Other

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    1. Brandt, Adam R., 2007. "Testing Hubbert," Energy Policy, Elsevier, vol. 35(5), pages 3074-3088, May.
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    3. Pesaran, M.H. & Samiei, H., 1993. "Forecasting Ultimate Resource Recovery," Cambridge Working Papers in Economics 9320, Faculty of Economics, University of Cambridge.
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    6. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    7. Russell S. Uhler, 1976. "Costs and Supply in Petroleum Exploration: The Case of Alberta," Canadian Journal of Economics, Canadian Economics Association, vol. 9(1), pages 72-90, February.
    8. Oliver E. Williamson, 2000. "The New Institutional Economics: Taking Stock, Looking Ahead," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 595-613, September.
    9. Norgaard, Richard B., 1990. "Economic indicators of resource scarcity: A critical essay," Journal of Environmental Economics and Management, Elsevier, vol. 19(1), pages 19-25, July.
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    11. Maslyuk, Svetlana & Smyth, Russell, 2009. "Non-linear unit root properties of crude oil production," Energy Economics, Elsevier, vol. 31(1), pages 109-118, January.
    12. Reynolds, Douglas B. & Kolodziej, Marek, 2007. "Institutions and the supply of oil: A case study of Russia," Energy Policy, Elsevier, vol. 35(2), pages 939-949, February.
    13. Hansen, Bruce E, 1997. "Approximate Asymptotic P Values for Structural-Change Tests," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(1), pages 60-67, January.
    14. Reynolds, Douglas B., 1999. "The mineral economy: how prices and costs can falsely signal decreasing scarcity," Ecological Economics, Elsevier, vol. 31(1), pages 155-166, October.
    15. Cutler J. Cleveland & Robert K. Kaufmann, 1997. "Natural Gas in the U.S.: How Far Can Technology Stretch the Resource Base?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 89-108.
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    17. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
    18. Robert K. Kaufmann & Cutler J. Cleveland, 2001. "Oil Production in the Lower 48 States: Economic, Geological, and Institutional Determinants," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 27-49.
    19. Ramsey, James B., 1980. "The economics of oil exploration : A probability-of-ruin approach," Energy Economics, Elsevier, vol. 2(1), pages 14-30, January.
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    Cited by:

    1. Reynolds, Douglas B., 2014. "World oil production trend: Comparing Hubbert multi-cycle curves," Ecological Economics, Elsevier, vol. 98(C), pages 62-71.
    2. Reynolds, Douglas B. & Baek, Jungho, 2012. "Much ado about Hotelling: Beware the ides of Hubbert," Energy Economics, Elsevier, vol. 34(1), pages 162-170.
    3. Reynolds, Douglas B. & Pippenger, Michael K., 2010. "OPEC and Venezuelan oil production: Evidence against a cartel hypothesis," Energy Policy, Elsevier, vol. 38(10), pages 6045-6055, October.
    4. Wang, Ting & Lin, Boqiang, 2014. "Impacts of unconventional gas development on China׳s natural gas production and import," Renewable and Sustainable Energy Reviews, Elsevier, vol. 39(C), pages 546-554.

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