A Model of Optimal Dynamic Oil Extraction: Evidence From a Large Middle Eastern Field
We model the economically optimal dynamicoil production decisions of a representative country whose oilfields resemble the largest developed oil field in Saudi Arabia,Ghawar. A government-controlled enterprise may base its oil productiondecisions on criteria other than maximization of the presentdiscounted value of profits. In particular, oil production decisionsare likely to reflect many political, strategic and geopoliticalmotives of the government. Our analysis of the optimal economicdecisions nevertheless enables one to assess the extent to whichlong-run value maximization is being followed. This in turn allowsone to judge the costs that political decisions are imposingin terms of foregone economic output, government revenue andforeign exchange. These costs ought to be of interest to policy-makerswithin Saudi-Arabia and also to external parties interested inmodifying Saudi pricing and production decisions. Copyright Kluwer Academic Publishers 2001
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Griffin, James M, 1978. "Joint Production Technology: The Case of Petrochemicals," Econometrica, Econometric Society, vol. 46(2), pages 379-96, March.
- Griffin, James M, 1977. "The Econometrics of Joint Production: Another Approach," The Review of Economics and Statistics, MIT Press, vol. 59(4), pages 389-97, November.
- Sickles, Robin C. & Williams, Jenny, 2008.
"Turning from crime: A dynamic perspective,"
Journal of Econometrics,
Elsevier, vol. 145(1-2), pages 158-173, July.
- Hartley, Peter R, 1994. "Interest Rates in a Credit Constrained Economy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(1), pages 23-60, February.
- Fousekis, Panos & Stefanou, Spiro E, 1996. "Capacity Utilization under Dynamic Profit Maximization," Empirical Economics, Springer, vol. 21(3), pages 335-59.
- Robert A. Marshalla & Dale M. Nesbitt, 1986. "Future World Oil Prices and Production Levels: An Economic Analysis," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 1-22.
- Kenneth L. Judd, 1998. "Numerical Methods in Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262100711, June.
When requesting a correction, please mention this item's handle: RePEc:kap:jproda:v:15:y:2001:i:1:p:59-71. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Rebekah McClure)
If references are entirely missing, you can add them using this form.