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AN ECONOMIC ANALYSIS OF ASPECTS OF PETROLEUM AND MILITARY SECURITY IN THE PERSIAN GULF
Author(s) -
Chapman Duane,
Khaneha
Publication year - 2001
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1093/cep/19.4.371
Subject(s) - persian , barrel (horology) , petroleum , gulf war , economics , crude oil , oil price , econometric model , economy , natural resource economics , agricultural economics , international trade , geography , geology , econometrics , petroleum engineering , economic history , monetary economics , archaeology , paleontology , philosophy , linguistics
Geologic estimates of remaining global petroleum resources place about 50% in the Persian Gulf. Production costs are estimated at $5 per barrel there and $15 per barrel in the North Sea and Alaska. According to mathematical results derived from depletion theory, the present value of economic rent from oil is on the order of $20 trillion. This article uses game theory to explain the $15–$20 per barrel price band that existed from 1986 to 1999. New economic forces have displaced this previously stable pattern; a new price range of $23–$30 is emerging. International trade in petroleum and conventional weapons are analyzed with econometric methods; the occurrence of nuclear weapons capability in the Persian Gulf region is explored.