IDEAS home Printed from https://ideas.repec.org/a/spr/bioerq/v2y2017i1d10.1007_s41247-016-0016-6.html
   My bibliography  Save this article

Oil Extraction, Economic Growth, and Oil Price Dynamics

Author

Listed:
  • Aude Illig

    (CeReMath, University of Toulouse Capitole)

  • Ian Schindler

    (CeReMath, University of Toulouse Capitole)

Abstract

We use economic production function theory and an empirical model of oil prices based only on oil extraction data to analyze the dynamics of the economy and oil prices as we transition into the contraction phase of oil extraction. We explore the implications with respect to several common scenarios. We find that price feedback cycles which lead to increased production during the growth phase of oil extraction go into reverse in the contraction phase of oil extraction speeding decline.

Suggested Citation

  • Aude Illig & Ian Schindler, 2017. "Oil Extraction, Economic Growth, and Oil Price Dynamics," Biophysical Economics and Resource Quality, Springer, vol. 2(1), pages 1-17, March.
    • Handle: RePEc:spr:bioerq:v:2:y:2017:i:1:d:10.1007_s41247-016-0016-6
    DOI: 10.1007/s41247-016-0016-6
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s41247-016-0016-6
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s41247-016-0016-6?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    2. Gérard Gaudet, 2007. "Natural resource economics under the rule of Hotelling," Canadian Journal of Economics, Canadian Economics Association, vol. 40(4), pages 1033-1059, November.
    3. James D. Hamilton, 2009. "Causes and Consequences of the Oil Shock of 2007-08," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 40(1 (Spring), pages 215-283.
    4. Wang, Ke & Feng, Lianyong & Wang, Jianliang & Xiong, Yi & Tverberg, Gail E., 2016. "An oil production forecast for China considering economic limits," Energy, Elsevier, vol. 113(C), pages 586-596.
    5. Cheong, Chin Wen, 2009. "Modeling and forecasting crude oil markets using ARCH-type models," Energy Policy, Elsevier, vol. 37(6), pages 2346-2355, June.
    6. Robert U. Ayres & Benjamin Warr, 2009. "The Economic Growth Engine," Books, Edward Elgar Publishing, number 13324.
    7. Hou, Aijun & Suardi, Sandy, 2012. "A nonparametric GARCH model of crude oil price return volatility," Energy Economics, Elsevier, vol. 34(2), pages 618-626.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. K. Bithas & P. Kalimeris, 2018. "Matter Matters: Reconsidering the (De)materialization of a Hundred Years of Growth," Biophysical Economics and Resource Quality, Springer, vol. 3(1), pages 1-10, March.
    2. Garcia, Luis Enrique & Illig, Aude & Schindler, Ian, 2018. "Oil Cycle Dynamics and Future Oil Price Scenarios," TSE Working Papers 18-969, Toulouse School of Economics (TSE).
    3. Reiner Kümmel & Dietmar Lindenberger, 2020. "Energy in Growth Accounting and the Aggregation of Capital and Output," Biophysical Economics and Resource Quality, Springer, vol. 5(1), pages 1-10, March.
    4. Luis Enrique Garcia & Aude Illig & Ian Schindler, 2020. "Understanding Oil Cycle Dynamics to Design the Future Economy," Biophysical Economics and Resource Quality, Springer, vol. 5(4), pages 1-17, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Illig, Aude & Schindler, Ian, 2016. "Oil Extraction and Price Dynamics," TSE Working Papers 16-701, Toulouse School of Economics (TSE).
    2. Ayres, Robert U. & van den Bergh, Jeroen C.J.M. & Lindenberger, Dietmar & Warr, Benjamin, 2013. "The underestimated contribution of energy to economic growth," Structural Change and Economic Dynamics, Elsevier, vol. 27(C), pages 79-88.
    3. Walid Matar & Saud M. Al-Fattah & Tarek Atallah & Axel Pierru, 2013. "An introduction to oil market volatility analysis," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 37(3), pages 247-269, September.
    4. Andrade de Sá, Saraly & Daubanes, Julien, 2016. "Limit pricing and the (in)effectiveness of the carbon tax," Journal of Public Economics, Elsevier, vol. 139(C), pages 28-39.
    5. Dakpogan, Arnaud & Smit, Eon, 2018. "The effect of electricity losses on GDP in Benin," MPRA Paper 89545, University Library of Munich, Germany.
    6. Baum, Christopher F. & Zerilli, Paola & Chen, Liyuan, 2021. "Stochastic volatility, jumps and leverage in energy and stock markets: Evidence from high frequency data," Energy Economics, Elsevier, vol. 93(C).
    7. Lin, Ling & Jiang, Yong & Xiao, Helu & Zhou, Zhongbao, 2020. "Crude oil price forecasting based on a novel hybrid long memory GARCH-M and wavelet analysis model," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 543(C).
    8. Garcia, Luis Enrique & Illig, Aude & Schindler, Ian, 2018. "Oil Cycle Dynamics and Future Oil Price Scenarios," TSE Working Papers 18-969, Toulouse School of Economics (TSE).
    9. Wei, Yu & Liu, Jing & Lai, Xiaodong & Hu, Yang, 2017. "Which determinant is the most informative in forecasting crude oil market volatility: Fundamental, speculation, or uncertainty?," Energy Economics, Elsevier, vol. 68(C), pages 141-150.
    10. Richard Green and Nicholas Vasilakos, 2012. "Storing Wind for a Rainy Day: What Kind of Electricity Does Denmark Export?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    11. Liu, Yuanyuan & Niu, Zibo & Suleman, Muhammad Tahir & Yin, Libo & Zhang, Hongwei, 2022. "Forecasting the volatility of crude oil futures: The role of oil investor attention and its regime switching characteristics under a high-frequency framework," Energy, Elsevier, vol. 238(PA).
    12. Fix, Blair, 2014. "Rethinking Profit: How Redistribution Drives Growth," Working Papers on Capital as Power 2014/02, Capital As Power - Toward a New Cosmology of Capitalism.
    13. Lambert, Jessica G. & Hall, Charles A.S. & Balogh, Stephen & Gupta, Ajay & Arnold, Michelle, 2014. "Energy, EROI and quality of life," Energy Policy, Elsevier, vol. 64(C), pages 153-167.
    14. Lang, Korbinian & Auer, Benjamin R., 2020. "The economic and financial properties of crude oil: A review," The North American Journal of Economics and Finance, Elsevier, vol. 52(C).
    15. Rezai, Armon & Taylor, Lance & Foley, Duncan, 2018. "Economic Growth, Income Distribution, and Climate Change," Ecological Economics, Elsevier, vol. 146(C), pages 164-172.
    16. David I. Stern, 2010. "The Role of Energy in Economic Growth," CCEP Working Papers 0310, Centre for Climate & Energy Policy, Crawford School of Public Policy, The Australian National University.
    17. Timothy J. Garrett, 2013. "Thermodynamics of long-run economic innovation and growth," Papers 1306.3554, arXiv.org.
    18. Michele Ruta & Anthony J. Venables, 2012. "International Trade in Natural Resources: Practice and Policy," Annual Review of Resource Economics, Annual Reviews, vol. 4(1), pages 331-352, August.
    19. Rye, Craig D. & Jackson, Tim, 2018. "A review of EROEI-dynamics energy-transition models," Energy Policy, Elsevier, vol. 122(C), pages 260-272.
    20. Victor Court & Pierre-André Jouvet & Frédéric Lantz, 2018. "Long-term endogenous economic growth and energy transitions," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:bioerq:v:2:y:2017:i:1:d:10.1007_s41247-016-0016-6. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.