IDEAS home Printed from https://ideas.repec.org/p/ris/uncgec/2011_013.html

The Economics of Peak Oil

Author

Listed:
  • Stephen Holland

    (University of North Carolina at Greensboro, Department of Economics)

Abstract

“Peak oil” refers to the future decline in world production of crude oil and to the accompanying potentially calamitous effects. The peak oil literature typically rejects economic analysis. This chapter, following Holland (2008), argues that economic analysis is indeed appropriate for analyzing oil scarcity since standard economic models can replicate the observed peaks in oil production. Moreover, the emphasis on peak oil is misplaced since peaking is not a good indicator of scarcity, peak oil techniques are overly simplistic, the catastrophes predicted by the peak oil literature are unlikely, and the literature does not contribute to correcting identified market failures. Efficiency of oil markets could be improved by instead focusing on remedying market failures such as excessive private discount rates, environmental externalities, market power, insufficient innovation incentives, incomplete futures markets, and insecure property rights.

Suggested Citation

  • Stephen Holland, 2011. "The Economics of Peak Oil," UNCG Economics Working Papers 11-13, University of North Carolina at Greensboro, Department of Economics.
    • Handle: RePEc:ris:uncgec:2011_013
    as

    Download full text from publisher

    File URL: https://bryan.uncg.edu/wp-content/uploads/2018/02/11-13.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Pindyck, Robert S, 1978. "The Optimal Exploration and Production of Nonrenewable Resources," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 841-861, October.
    2. Harold Hotelling, 1931. "The Economics of Exhaustible Resources," Journal of Political Economy, University of Chicago Press, vol. 39(2), pages 137-137.
    3. Brown, Gardner M, Jr & Field, Barry C, 1978. "Implications of Alternative Measures of Natural Resource Scarcity," Journal of Political Economy, University of Chicago Press, vol. 86(2), pages 229-243, April.
    4. Stephen P. Holland, 2008. "Modeling Peak Oil," The Energy Journal, , vol. 29(2), pages 61-80, April.
    5. repec:aen:journl:2008v29-02-a04 is not listed on IDEAS
    6. Jeffrey A. Krautkraemer, 1998. "Nonrenewable Resource Scarcity," Journal of Economic Literature, American Economic Association, vol. 36(4), pages 2065-2107, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Taking peak oil seriously
      by Economic Logician in Economic Logic on 2011-09-02 19:44:00

    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. Lin, C.Y. Cynthia, 2009. "An Empirical Dynamic Model of OPEC and Non-OPEC," Working Papers 225895, University of California, Davis, Department of Agricultural and Resource Economics.
    2. Smith, James L., 2012. "On the portents of peak oil (and other indicators of resource scarcity)," Energy Policy, Elsevier, vol. 44(C), pages 68-78.
    3. Toman, Michael & Krautkraemer, Jeffrey, 2003. "Fundamental Economics of Depletable Energy Supply," RFF Working Paper Series dp-03-01, Resources for the Future.
    4. Romain Capliez & Carl Grekou & Emmanuel Hache & Valérie Mignon, 2026. "What Drives Mineral Commodity Prices? A Historical Perspective on Demand and Supply Dynamics," Working Papers hal-05664063, HAL.
    5. James D. Hamilton, 2012. "Oil Prices, Exhaustible Resources, and Economic Growth," NBER Working Papers 17759, National Bureau of Economic Research, Inc.
    6. Robert S. Pindyck, 1984. "Uncertainty in the Theory of Renewable Resource Markets," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 51(2), pages 289-303.
    7. Frechette, Darren L., 1999. "Scarcity rents and the returns to mining," Resources Policy, Elsevier, vol. 25(1), pages 39-49, March.
    8. Hassler, J. & Krusell, P. & Smith, A.A., 2016. "Environmental Macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 1893-2008, Elsevier.
    9. 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.
    10. Vicknair, David & Tansey, Michael & O'Brien, Thomas E., 2022. "Measuring fossil fuel reserves: A simulation and review of the U.S. Securities and Exchange Commission approach," Resources Policy, Elsevier, vol. 79(C).
    11. Meier, Felix D. & Quaas, Martin F., 2021. "Booming gas – A theory of endogenous technological change in resource extraction," Journal of Environmental Economics and Management, Elsevier, vol. 107(C).
    12. Cynthia Lin, C.-Y. & Wagner, Gernot, 2007. "Steady-state growth in a Hotelling model of resource extraction," Journal of Environmental Economics and Management, Elsevier, vol. 54(1), pages 68-83, July.
    13. Gregory Casey, 2024. "Energy Efficiency and Directed Technical Change: Implications for Climate Change Mitigation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(1), pages 192-228.
    14. repec:aen:journl:ej36-1-03 is not listed on IDEAS
    15. Margaret E. Slade & Henry Thille, 2009. "Whither Hotelling: Tests of the Theory of Exhaustible Resources," Annual Review of Resource Economics, Annual Reviews, vol. 1(1), pages 239-259, September.
    16. Cuddington, John T. & Nülle, Grant, 2014. "Variable long-term trends in mineral prices: The ongoing tug-of-war between exploration, depletion, and technological change," Journal of International Money and Finance, Elsevier, vol. 42(C), pages 224-252.
    17. Soren T. Anderson & Ryan Kellogg & Stephen W. Salant, 2018. "Hotelling under Pressure," Journal of Political Economy, University of Chicago Press, vol. 126(3), pages 984-1026.
    18. Okullo, Samuel J. & Reynès, Frédéric & Hofkes, Marjan W., 2015. "Modeling peak oil and the geological constraints on oil production," Resource and Energy Economics, Elsevier, vol. 40(C), pages 36-56.
    19. van den Bijgaart, Inge & Rodriguez, Mauricio, 2023. "Closing wells: Fossil development and abandonment in the energy transition," Resource and Energy Economics, Elsevier, vol. 74(C).
    20. Kharitonova, M. & Mikhailov, A. & Matsko, N., 2013. "Influence of the time factor on the availability of deposits of nonferrous metals," Resources Policy, Elsevier, vol. 38(4), pages 490-495.
    21. Siebert, Horst, 1981. "Ökonomische Theorie natürlicher Ressourcen: Ein Überblick," Open Access Publications from Kiel Institute for the World Economy 3576, Kiel Institute for the World Economy.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Lists

    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. Economic Logic blog

    Statistics

    Access and download statistics

    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:ris:uncgec:2011_013. 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: Albert Link (email available below). General contact details of provider: https://edirc.repec.org/data/edncgus.html .

    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.