Open AccessWHITHER OIL PRICES: THE EVIDENCE FROM THEORY
Author(s) -
Fisher Anthony C.
Publication year - 1987
Publication title -
natural resource modeling
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.28
H-Index - 32
eISSN - 1939-7445
pISSN - 0890-8575
DOI - 10.1111/j.1939-7445.1987.tb00024.x
Subject(s) - cartel , barrel (horology) , economics , jump , monetary economics , production (economics) , microeconomics , materials science , physics , quantum mechanics , composite material , incentive
This paper suggests a likely course of oil prices over the next several yearsn the basis of theoretical models of the world oil market calibrated to pre‐1973 levels of prices, production, and reserves. The current competitive environment, with price in the $10‐$16 per barrel range and increasing very gradually, should prevail until the early 1990's. At that time excess supply and excess capacity in the industry will all but disappear, making a jump to the OPEC cartel's joint wealth‐maximizing price of about $25‐$30 per barrel likely.