Econometrics of exhaustible resource supply: a theory and an application. Final report
An econometric model of US oil and natural gas discoveries is developed in this study. The econometric model is explicitly derived as the solution to the problem of maximizing the expected discounted after tax present value of revenues net of exploration, development, and production costs. The model contains equations representing producers' formation of price expectations and separate equations giving producers' optimal exploration decisions contingent on expected prices. A procedure is developed for imposing resource base constraints (e.g., ultimate recovery estimates based on geological analysis) when estimating the econometric model. The model is estimated using aggregate post-war data for the United States. Production from a given addition to proved reserves is assumed to follow a negative exponential path, and additions of proved reserves from a given discovery are assumed to follow a negative exponential path. Annual discoveries of oil and natural gas are estimated as latent variables. These latent variables are the endogenous variables in the econometric model of oil and natural gas discoveries. The model is estimated without resource base constraints. The model is also estimated imposing the mean oil and natural gas ultimate recovery estimates of the US Geological Survey. Simulations through the year 2020 are reported for various future price regimes.
- Research Organization:
- Carnegie-Mellon Univ., Pittsburgh, PA (USA)
- DOE Contract Number:
- AC02-79ET60003
- OSTI ID:
- 5493925
- Report Number(s):
- DOE/ET/60003-1; ON: DE82010056
- Country of Publication:
- United States
- Language:
- English
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Related Subjects
03 NATURAL GAS
29 ENERGY PLANNING
POLICY AND ECONOMY
NATURAL GAS DEPOSITS
RESOURCE DEPLETION
PETROLEUM DEPOSITS
ECONOMETRICS
EXPLOITATION
EXPLORATION
FORECASTING
MATHEMATICAL MODELS
NATURAL GAS
PETROLEUM
PRODUCTION
ECONOMICS
ENERGY SOURCES
FLUIDS
FOSSIL FUELS
FUEL GAS
FUELS
GAS FUELS
GASES
GEOLOGIC DEPOSITS
MINERAL RESOURCES
RESOURCES
020100* - Petroleum- Reserves- (-1989)
030100 - Natural Gas- Reserves- (-1989)
294002 - Energy Planning & Policy- Petroleum
294003 - Energy Planning & Policy- Natural Gas