IDEAS home Printed from https://ideas.repec.org/p/rpi/rpiwpe/0512.html
   My bibliography  Save this paper

Technology and Petroleum Exhaustion: Evidence from Two Mega-Oilfields

Author

Listed:
  • John M. Gowdy

    () (Department of Economics, Rensselaer Polytechnic Institute, Troy NY 12180-3590, USA)

  • Roxana Julia

    (Department of Economics, Rensselaer Polytechnic Institute, Troy NY 12180-3590, USA)

Abstract

. In this paper we use results from the Hotelling model of non-renewable resources to examine the hypothesis that technology may increase petroleum reserves. We present empirical evidence from two well-documented mega-oilfields: the Forties in the North Sea and the Yates in West Texas. Patterns of depletion in these two fields suggest that when a resource is finite, technological improvements do increase supply temporarily. But in these two fields, the effect of new technology was to increase the rate of depletion without altering the fields' ultimate recovery - in line with Hotelling's predictions. Our results imply that temporary low prices may be misleading indicators of future resource scarcity and call into question the future ability of current mega-oilfields to meet a sharp increase in oil demand.

Suggested Citation

  • John M. Gowdy & Roxana Julia, 2005. "Technology and Petroleum Exhaustion: Evidence from Two Mega-Oilfields," Rensselaer Working Papers in Economics 0512, Rensselaer Polytechnic Institute, Department of Economics, revised Apr 2006.
  • Handle: RePEc:rpi:rpiwpe:0512
    as

    Download full text from publisher

    File URL: http://www.economics.rpi.edu/workingpapers/rpi0512.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. John M. Gowdy, 2004. "The Revolution in Welfare Economics and Its Implications for Environmental Valuation and Policy," Land Economics, University of Wisconsin Press, vol. 80(2), pages 239-257.
    2. Hanley, Nick & Shogren, Jason & White, Ben, 2013. "Introduction to Environmental Economics," OUP Catalogue, Oxford University Press, edition 2, number 9780199568734.
    3. Hallock, John L. & Tharakan, Pradeep J. & Hall, Charles A.S. & Jefferson, Michael & Wu, Wei, 2004. "Forecasting the limits to the availability and diversity of global conventional oil supply," Energy, Elsevier, vol. 29(11), pages 1673-1696.
    4. Anderson, Seth C & et al, 2001. "A Multifactor Analysis of Country Fund Returns," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 24(3), pages 331-346, Fall.
    5. 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.
    6. Daniel Kahneman, 2003. "Maps of Bounded Rationality: Psychology for Behavioral Economics," American Economic Review, American Economic Association, vol. 93(5), pages 1449-1475, December.
    7. Ernst Fehr & Urs Fischbacher, 2002. "Why Social Preferences Matter -- The Impact of Non-Selfish Motives on Competition, Cooperation and Incentives," Economic Journal, Royal Economic Society, vol. 112(478), pages 1-33, March.
    8. Jeffrey A. Krautkraemer, 1998. "Nonrenewable Resource Scarcity," Journal of Economic Literature, American Economic Association, vol. 36(4), pages 2065-2107, December.
    9. Alcott, Blake, 2005. "Jevons' paradox," Ecological Economics, Elsevier, vol. 54(1), pages 9-21, July.
    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. Höök, Mikael & Hirsch, Robert & Aleklett, Kjell, 2009. "Giant oil field decline rates and their influence on world oil production," Energy Policy, Elsevier, vol. 37(6), pages 2262-2272, June.
    2. Sorrell, Steve & Speirs, Jamie & Bentley, Roger & Miller, Richard & Thompson, Erica, 2012. "Shaping the global oil peak: A review of the evidence on field sizes, reserve growth, decline rates and depletion rates," Energy, Elsevier, vol. 37(1), pages 709-724.
    3. Tang, Xu & Zhang, Baosheng & Höök, Mikael & Feng, Lianyong, 2010. "Forecast of oil reserves and production in Daqing oilfield of China," Energy, Elsevier, vol. 35(7), pages 3097-3102.
    4. Hughes, Larry, 2010. "Eastern Canadian crude oil supply and its implications for regional energy security," Energy Policy, Elsevier, vol. 38(6), pages 2692-2699, June.
    5. Sena, Marcelo Fonseca Monteiro de & Rosa, Luiz Pinguelli & Szklo, Alexandre, 2013. "Will Venezuelan extra-heavy oil be a significant source of petroleum in the next decades?," Energy Policy, Elsevier, vol. 61(C), pages 51-59.
    6. Hu, Yan & Hall, Charles A.S. & Wang, Jianliang & Feng, Lianyong & Poisson, Alexandre, 2013. "Energy Return on Investment (EROI) of China's conventional fossil fuels: Historical and future trends," Energy, Elsevier, vol. 54(C), pages 352-364.

    More about this item

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:rpi:rpiwpe:0512. 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: (Shawn Kantor). General contact details of provider: http://edirc.repec.org/data/derpius.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.