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Optimal expansion of the canadian tar sands industry
Author(s) -
Dupont Serge,
Fuller J. David
Publication year - 1987
Publication title -
optimal control applications and methods
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.458
H-Index - 44
eISSN - 1099-1514
pISSN - 0143-2087
DOI - 10.1002/oca.4660080203
Subject(s) - oil sands , tar (computing) , point (geometry) , extreme point , economics , oil supply , set (abstract data type) , optimal control , limit (mathematics) , natural resource economics , environmental science , petroleum engineering , mathematical optimization , computer science , mathematics , geology , geography , mathematical analysis , geometry , cartography , asphalt , combinatorics , programming language
Our model minimizes the discounted cost of meeting projected Canadian oil demand from the currently inexpensive but limited conventional oil, more expensive tar sands and still more expensive imports. We limit the rates of increase of the three sources of supply and impose non‐negativity constraints on two of the state variables, conventional supply and imports. The optimal control is generalized bang‐bang, but the set of extreme points depends on the status of the state constraints. All possible optimal sequences of extreme point controls are determined. Implications for tar sands development policy are discussed, along with economic interpretations and additions to the theory of exhaustible resources.