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The tug-of-war between resource depletion and technological change in the global oil industry 1981 - 2009




We perform an empirical analysis of the extent to which ongoing technological change through R&D activity has offset the effect of ongoing depletion on the cost of finding additional reserves of oil in eight global regions. We introduce a finding cost function that among other factors depends on the cumulative number of past R&D expenses and cumulative past production, measuring technological change and depletion, respectively. For all our regions we find significant effects of both depletion and technological change on oil finding costs from 1981 to 2009, barring cyclical variations in finding costs that could come from changes in factor prices. For almost all regions technology more than mitigated depletion until around the mid-nineties. However, we find that depletion outweighed technological progress over the last decade.

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  • Lars Lindholt, 2013. "The tug-of-war between resource depletion and technological change in the global oil industry 1981 - 2009," Discussion Papers 732, Statistics Norway, Research Department.
  • Handle: RePEc:ssb:dispap:732

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    References listed on IDEAS

    1. Reynolds, Douglas B., 1999. "The mineral economy: how prices and costs can falsely signal decreasing scarcity," Ecological Economics, Elsevier, vol. 31(1), pages 155-166, October.
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    5. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
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    Cited by:

    1. Aune, Finn Roar & Grimsrud, Kristine & Lindholt, Lars & Rosendahl, Knut Einar & Storrøsten, Halvor Briseid, 2017. "Oil consumption subsidy removal in OPEC and other Non-OECD countries: Oil market impacts and welfare effects," Energy Economics, Elsevier, vol. 68(C), pages 395-409.
    2. Gavenas, Ekaterina & Rosendahl, Knut Einar & Skjerpen, Terje, 2015. "CO2-emissions from Norwegian oil and gas extraction," Energy, Elsevier, vol. 90(P2), pages 1956-1966.

    More about this item


    Oil; depletion; technological change; R&D; finding costs;

    JEL classification:

    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices

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