Financial market pressure, tacit collusion and oil price formation

Aune, Finn Roar; Mohn, Klaus; Osmundsen, Petter; Rosendahl, Knut Einar

doi:10.1016/j.eneco.2009.09.003

Cited by 32 publications

(17 citation statements)

References 31 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…We present a model where we assume Cournot behavior, which means that a core of countries within OPEC takes Non-OPEC's and non-Core OPEC's extraction path as given, but maximizes joint profits taking into account the price responsiveness on the demand side. Similar assumptions have 5 been made in earlier simulation models of the oil market (e.g., Salant, 1982;Berg et al, 2002;Huppmann and Holz, 2009;Aune et al, 2010;Okullo and Reynès, 2011;Okullo et al, 2015), however, none of the studies analyze the effects of energy efficiency measures.…”

mentioning

confidence: 88%

Fuel Efficiency Improvements: Feedback Mechanisms and Distributional Effects in the Oil Market

Aune

Bøeng

Kverndokk³

et al. 2017

Environ Resource Econ

Self Cite

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We study the interactions between fuel efficiency improvements in the transport sector and the oil market, where the efficiency improvements are policy-induced in certain regions of the world. We are especially interested in feedback mechanisms of fuel efficiency such as the rebound effect, carbon leakages and the "green paradox", but also the distributional effects via oil price changes for different regions, sectors and oil producers. An intertemporal numerical model of the international oil market is introduced, where OPEC-Core producers have market power. We find that the rebound effect has a noticeable effect on the transport sector, but also on other sectors through lower oil prices in the regions that introduce the policy. There is a small green paradox effect in the sense that oil consumption increases initially when the fuel efficiency measures are gradually implemented. Finally, there will be significant carbon leakages if the policy is not implemented in all regions, with leakage rates of 35 per cent or higher. Non-OPEC producers will suffer more than OPEC producers by fuel efficiency policies due to high production costs. Terms of use: Documents inJEL-Code: D420, Q540, R480.

show abstract

mentioning

confidence: 88%

Fuel Efficiency Improvements: Feedback Mechanisms and Distributional Effects in the Oil Market

Aune

Bøeng

Kverndokk³

et al. 2017

Environ Resource Econ

Self Cite

View full text Add to dashboard Cite

show abstract

“…We now turn to the question of how price expectations are formed, and discuss how gas and oil prices may interact in the demand function for rigs, D(p G ,p O ,r i ð Þ ). Price expectations for oil and gas are usually assumed to be adaptive (see e.g., Farzin, 2001;Nguyen andNabney, 2010, andAune et al, 2010). That is, expected prices t periods into the future are assumed to depend on current and past prices.…”

Section: More On the Effects Of Gas And Oil Pricesmentioning

confidence: 99%

Understanding rig rate formation in the Gulf of Mexico

2015

Self Cite

View full text Add to dashboard Cite

“…There are three recent numerical partial equilibrium models for the crude oil market: Aune et al (2010) present a dynamic equilibrium model in which both production and investment decisions of OPEC are strategic. They emphasize the requirement by financial markets that certain profitability measures are fulfilled 2 so that investment can take place.…”

Section: Introductionmentioning

confidence: 99%

Endogenous Shifts in OPEC Market Power: A Stackelberg Oligopoly with Fringe

Huppmann

2013

SSRN Journal

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract This article proposes a two-stage oligopoly model for the crude oil market. In a game of several Stackelberg leaders, market power increases endogenously as the spare capacity of the competitive fringe goes down. This effect is due to the specific cost function characteristics of extractive industries. The model captures the increase of OPEC market power before the financial crisis and its drastic reduction in the subsequent turmoil at the onset of the global recession. The two-stage model better replicates the price path over the years 2003-2011 compared to a standard simultaneous-move, onestage Nash-Cournot model with a fringe. This article also discusses how most large-scale numerical equilibrium models, widely applied in the energy sector, over-simplify and potentially misinterpret market power exertion. Terms of use: Documents in

show abstract

Financial market pressure, tacit collusion and oil price formation

Cited by 32 publications

References 31 publications

Fuel Efficiency Improvements: Feedback Mechanisms and Distributional Effects in the Oil Market

Fuel Efficiency Improvements: Feedback Mechanisms and Distributional Effects in the Oil Market

Understanding rig rate formation in the Gulf of Mexico

Endogenous Shifts in OPEC Market Power: A Stackelberg Oligopoly with Fringe

Contact Info

Product

Resources

About