Economic Theory and the Supply of Oil

Ferdinand Banks ()
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Ferdinand Banks: Department of Economics, Postal: Department of Economics, Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden

No 1997:22, Working Paper Series from Uppsala University, Department of Economics

Abstract: This paper is concerned with four things. First, establishing the importance of the reserve-production ratio, and its significance relative to the 'life' of the oil reserves. Next, providing a simple derivation and discussion of Hotelling's theorem, while claiming its inadequacy for discussing physical as compared to financial assets. I then consider the short term pricing of oil presenting a simplified exposition of the 'convenience yield', and the part it plays in the term structure of oil prices. Finally, I take a look at a recent argument which claims that in reality there will not be an increased dependence of Middle East oil in the near or distant future. There is also a short conclusion in which some forecasts of the demand for oil in the years 2000 and 2010 are given.

Keywords: Reserve-produduction ratio; hotelling; convenience yield; oil reserves (search for similar items in EconPapers)
JEL-codes: Q41 (search for similar items in EconPapers)
Pages: 25 pages
Date: 1998-08-15
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:uunewp:1997_022

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