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Does OPEC act as a Residual Producer?

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  • Bandyopadhyay, Kaushik Ranjan

Abstract

In the conventional energy modeling systems, such as the one followed by the National Energy Modeling System (NEMS), USA or the International Energy Agency (IEA), Paris, the OPEC has been assumed to act like a residual producer. Notwithstanding such assumptions in the aforesaid models, the OPEC’s role just as a residual producer still continues to remain an open question. It deserves to be recognised that the OPEC is not a homogeneous entity but consists of producers with diverse proven reserve positions and hence diverse interests and expectations. So, it would be rather naive to expect that the OPEC as a whole would necessarily comply with the call without taking into account the interests of its member countries. Taking cue from above, a model of world crude demand and Non-OPEC crude supply has been constructed in the paper to cross-examine whether the assumption of the conventional modeling approaches regarding the OPEC’s role as a residual producer actually holds good in practice.

Suggested Citation

  • Bandyopadhyay, Kaushik Ranjan, 2009. "Does OPEC act as a Residual Producer?," MPRA Paper 25841, University Library of Munich, Germany, revised 2010.
    • Handle: RePEc:pra:mprapa:25841
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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