The future of oil: Geology versus technology

We discuss and reconcile the geological and economic/technological views concerning the future of world oil production and prices, and present a nonlinear econometric model of the world oil market that encompasses both views. The model performs far better than existing empirical models in forecastin...

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Bibliographic Details
Published inInternational journal of forecasting Vol. 31; no. 1; pp. 207 - 221
Main Authors Benes, Jaromir, Chauvet, Marcelle, Kamenik, Ondra, Kumhof, Michael, Laxton, Douglas, Mursula, Susanna, Selody, Jack
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 01.01.2015
Elsevier Sequoia S.A
Subjects
Bayesian econometrics
Crude oil prices
Econometrics
Economic forecasting
Exhaustible resources
Fossil fuels
Hubbert’s peak oil
Oil depletion
Petroleum production
Price elasticity
Studies
Supply & demand
Exhaustible resources
Hubbert’s peak oil
Fossil fuels
Oil depletion
Bayesian econometrics
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Summary:We discuss and reconcile the geological and economic/technological views concerning the future of world oil production and prices, and present a nonlinear econometric model of the world oil market that encompasses both views. The model performs far better than existing empirical models in forecasting oil prices and oil output out-of-sample. Its point forecast is for a near doubling of the real price of oil over the coming decade, though the error bands are wide, reflecting sharply differing judgments on the ultimately recoverable reserves, and on future price elasticities of oil demand and supply.
ISSN:0169-2070
1872-8200
DOI:10.1016/j.ijforecast.2014.03.012