OPEC's optimal crude oil price

Horn, Manfred

doi:10.1016/s0301-4215(02)00289-6

Cited by 46 publications

(24 citation statements)

References 8 publications

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“…The results indicate that the QQ-plots do not lie in a straight line because the two distributions for each series deviate from the linearity pattern and visually there are fat tails. According to Horn (2004), we expect that the crude oil prices do not follow an independent and identical distribution. If the random variables are independent, then the unconditional distribution is equal to the conditional distribution.…”

Section: Ii1 Data and Preliminary Testsmentioning

confidence: 99%

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Long run dynamic volatilities between OPEC and non-OPEC crude oil prices

Ghassan

Alhajhoj

2016

Applied Energy

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Understanding the long-run dynamics of OPEC and non-OPEC crude oil prices is important in an era of increased financialization of petroleum markets. Utilizing an ECM within a threshold cointegration and CGARCH errors framework, we provide evidence on the cointegrating relationship and estimate how and to what extent the respective prices adjust to eliminate disequilibrium. Our findings suggest that the adjustment process of OPEC prices to the positive discrepancies is slow which implies that OPEC producers do not prefer moderate oil prices; however, the reverse holds for non-OPEC producers. These results reflect distinct competitive behaviors between OPEC and non-OPEC producers.

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Section: Ii1 Data and Preliminary Testsmentioning

confidence: 99%

“…Lin (2009) finds oligopolistic behavior among non-OPEC producers and collusion among OPEC producers during the period 1970-2004. Hamilton (2008 investigates the factors responsible for changes in crude oil prices by reviewing the statistical behavior of oil prices and the key features of crude oil supply and demand.…”

Section: Introduction and Literature Reviewmentioning

confidence: 99%

Long run dynamic volatilities between OPEC and non-OPEC crude oil prices

Ghassan

Alhajhoj

2016

Applied Energy

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“…Slade (1982) and Moazzami and Anderson (1994) found evidence that the price path follows a U-shape, and this means that resource prices will eventually increase, complying with the Hotelling rule. Krautkraemer (1998) Horn (2004). Ramcharran (2001) tested this theory using data from 1973 to 2000 and concludes that it does not apply.…”

Section: Literature Reviewmentioning

confidence: 99%

OPEC and Political Considerations When Deciding on Oil Extraction

Kisswani

2010

SSRN Journal

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Two oil price shocks changed the pattern of cheap oil. The first was the Arab embargo on oil exports in 1973. Oil prices rose five fold. In 1978, the second was the fall of Shah Iran. Prices soared to $80-$100 a barrel in today's prices. In 1960, OPEC was established and since then it has been a considerable political and economical force in the oil market. Two thirds of the world's oil reserves belong to OPEC members. OPEC is accused of being responsible for most of the price increases due to their production cuts and market power. This paper provides a general framework to examine the role of OPEC in affecting oil prices through the extracted quantities. A mathematical model is developed to explore the objective function of OPEC, which includes economic and political considerations. The idea is that OPEC members consider both the political support of their citizens and profits when determining oil extraction rates. This support is represented by a -harm function‖ which was added to the objective function of OPEC. The solution of the model lends some support for inclusion of this harm function, through which OPEC benefits from the cuts in production aimed at harming the western countries. For this harm function to be meaningful empirically, OPEC members should have a high harm indicator, α t . With high harm indicator values, OPEC harms itself financially. The results suggest that OPEC appears to be accepting considerable monetary setbacks to appease its citizens' taste for harming the West. At different discount rates, the monetary losses range from about 10-20%. Solving the mathematical model required estimation of the residual demand that OPEC faces plus the cost function that applies to OPEC production. This paper reports the results of these estimations.

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“…Firstly there is the matter of production cost. For instance, the production cost of synthetic crude oils is expected to be substantially higher than the current marginal cost of conventional mineral oil (Horn 2004, Persson et al 2007. Similarly, the production cost for unconventional methane supply is expected to be on average substantially higher than for conventional natural gas (Nederlof 1988).…”

Section: Type Of Fuelmentioning

confidence: 99%

Fuels for the future

Reijnders

2009

Journal of Integrative Environmental Sciences

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There are unconventional fuels that may serve as near term major replacements for conventional mineral oil and natural gas. These include fuels from oil shale and bitumen, liquid fuels from coal, methane from methane hydrates, biofuels and the secondary fuel hydrogen. Here, these fuels will be reviewed as to their presumable stocks and life cycle wastes, emissions and inputs of natural resources. The unconventional fuels are usually characterized by a relatively poor source-toburner energy efficiency when compared with current conventional mineral oil and gas. Apart from some varieties of hydrogen and biofuel, their life cycles are characterized by relatively large water inputs, emissions, and wastes. The unconventional fuels shale oil, bituminous oil, coal liquids, and methane from methane hydrates are based on natural resources which are practically finite. This does not hold for biofuels, but the sustainable supply thereof is severely limited when large numbers of people also have to be fed. In view of the problems associated with unconventional fuels, there is a case to consider fuel-less replacements for many fuel applications.

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OPEC's optimal crude oil price

Cited by 46 publications

References 8 publications

Long run dynamic volatilities between OPEC and non-OPEC crude oil prices

Long run dynamic volatilities between OPEC and non-OPEC crude oil prices

OPEC and Political Considerations When Deciding on Oil Extraction

Fuels for the future

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