Reserves and Reserve Production Ratios In Imperfect Markets

Recent changes in reserves or reserve/production ratios are often cited as evidence of hypothesized economic changes in petroleum markets. However, the technology of petroleum production and the fact that international petroleum markets are not perfectly competitive combine to render incorrect inter...

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Bibliographic Details
Published in:The Energy journal (Cambridge, Mass.) Mass.), 1989-04, Vol.10 (2), p.177-186
Main Author: Brown, Keith C.
Format: Article
Language:English
Subjects:
Capital costs
Commercial production
Economic change
Economic costs
Economic growth rate
Energy resources
Fixed costs
Manycountries
Market prices
Petroleum
Petroleum industry
Petroleum production
Present value
Production
Production control
Production costs
Production management
Rates of change
Ratios
Reserves
Short Papers, Notes, and Comments
Statistical analysis
Studies
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Summary:Recent changes in reserves or reserve/production ratios are often cited as evidence of hypothesized economic changes in petroleum markets. However, the technology of petroleum production and the fact that international petroleum markets are not perfectly competitive combine to render incorrect interpretations all too easy. Both market imperfections and technical limitations to production rates slow market adjustments to changes in expected prices or costs. This makes it difficult to use observed changes in reserve/production ratios as evidence of some hypothesized economic change, since neither of the observations used to get the observed change may have been close to the then-prevailing long run equilibrium.
ISSN:0195-6574
1944-9089
DOI:10.5547/ISSN0195-6574-EJ-Vol10-No2-12