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Author: Gideon Bornstein Publisher: ISBN: Category : Languages : en Pages :
Book Description
We use new, comprehensive micro data on oil fields to build and estimate a structural model of the oil industry embedded in a general equilibrium model of the world economy. In the model, firms that belong to OPEC act as a cartel. The remaining firms are a competitive fringe. We use the model to study the macroeconomic impact of the advent of fracking. Fracking weakens the OPEC cartel, leading to a large long-run decline in oil prices. Fracking also reduces the volatility of oil prices in the long run because fracking firms can respond more quickly to changes in oil demand.
Author: Gideon Bornstein Publisher: ISBN: Category : Languages : en Pages :
Book Description
We use new, comprehensive micro data on oil fields to build and estimate a structural model of the oil industry embedded in a general equilibrium model of the world economy. In the model, firms that belong to OPEC act as a cartel. The remaining firms are a competitive fringe. We use the model to study the macroeconomic impact of the advent of fracking. Fracking weakens the OPEC cartel, leading to a large long-run decline in oil prices. Fracking also reduces the volatility of oil prices in the long run because fracking firms can respond more quickly to changes in oil demand.
Author: Nancy Peregrim Marion Publisher: ISBN: Category : Economic stabilization Languages : en Pages : 46
Book Description
This paper examines the effect of OPEC price increases on the welfare of a group of oil-importing industrial countries. It also studies how taxes or subsidies on oil imports or capital flows could alter the group's welfare. The analysis is conducted using a general-equilibrium model that describes the behavior of two actors, OPEC and the oil-importing bloc called Industria. The analysis is explicitly intertemporal and takes into account endogenous changes in saving, investment and employment. We show that Industria's welfare is affected not only by direct oil terms of trade effect, but also by changes in the world rate of interest(intertemporal terms of trade effects) and, for rigid wages, changes in employment. Thus Industria gains from the intertemporal terms of trade effect if it is a net borrower and the world rate of interest falls. Precise conditions for whether the world rate of interest falls or rises are given. We also show that Industria may gain from subsidizing oil imports rather than taxing them, in particular if wages are rigid, and that it may gain from restricting international capital mobility.
Author: Gideon Bornstein Publisher: ISBN: Category : Hydraulic fracturing Languages : en Pages : 51
Book Description
We use a new micro data set to compile some key facts about the oil market and estimate a structural industry equilibrium model that is consistent with these facts. We find that demand and supply shocks contribute equally to the volatility of oil prices but that the volatility of investment by oil firms is driven mostly by demand shocks. Our model predicts that the advent of fracking will eventually result in a large reduction in oil price volatility.
Author: Daniel Huppmann Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
This paper proposes a partial equilibrium model to describe the global crude oil market. Pricing on the global crude oil market is strongly influenced by price indices such as WTI (USA) and Brent (Northwest Europe). Adapting an approach for pool-based electricity markets, the model captures the particularities of these benchmark price indices and their influence on the market of physical oil. This approach is compared to a model with bilateral trade relations as is traditionally used in models of energy markets. With these two model approaches, we compute the equilibrium solutions for several market power scenarios to investigate whether the multi-pool approach may be better suited than the bilateral trade model to describe the crude oil market. The pool-based approach yields, in general, results closer to observed quantities and prices, with the best fit obtained by the scenario of an OPEC oligopoly. We conclude that the price indices indeed are important on the global crude market in determining the prices and flows, and that OPEC effectively exerts market power, but in a non-cooperative way.
Author: Mr.Noureddine Krichene Publisher: INTERNATIONAL MONETARY FUND ISBN: 9781451863222 Category : Business & Economics Languages : en Pages : 0
Book Description
This paper examines the relationship between monetary policy and oil prices within a world oil demand and supply model. Low price and high income elasticities of demand and rigid supply explain high price volatilities and producers' market power. Exchange and interest rates do influence oil market equilibrium. The relationship between oil prices and interest rates is a two-way relationship that depends on the type of oil shock. During a supply shock, rising oil prices caused interest rates to increase; whereas during a demand shock, falling interest rates caused oil prices to rise. Record low interest rates led to high oil price volatility in 2005. Data shows that world economic growth and price stability require stable oil markets and therefore more prudent monetary policies.
Author: Istemi Berk Publisher: ISBN: Category : Languages : en Pages :
Book Description
The global crude oil market has gone through two important phases over the recent years. The first one was the price collapse that started in the third quarter of 2014 and continued until mid-2016. The second phase occurred in late 2016, after major producers within and outside OPEC agreed to cut production in order to adjust the ongoing fall in oil prices, which is now known as the OPEC+ agreement. This paper analyzes the effects of these recent developments on the market structure and on the behavior of major producers in the market. To this end, we develop a partial equilibrium model with a spatial structure for the global crude oil market and simulate the market for the period between 2013 and 2017 under oligopolistic, cartel and perfectly competitive market structure setups. The simulation results reveal that, although the oligopolistic market structures fit overall well to the realized market outcomes, they are not successful at explaining the low prices during 2015 and 2016, which instead are closer to estimated competitive levels. Moreover, we further suggest that from 2014 onward, the market power potential of major suppliers has shrunk considerably, supporting the view that the market has become more competitive. We also analyze the Saudi Arabia- and Russia-led OPEC+ agreement, and find that planned production cuts in 2017, particularly of Saudi Arabia (486 thousand barrels/day) and Russia (300 thousand barrels/day), were below the levels of estimated non-competitive market structure setups. This explains why the oil prices did not recover to pre-2014 levels although a temporary adjustment was observed in 2017.
Author: Gideon Bornstein
Author: Gideon Bornstein
Author: Nancy Peregrim Marion
Author: J. Crémer
Author: Anton Nakov
Author: Gideon Bornstein
Author: David Jay Green
Author: Daniel Huppmann
Author: Mr.Noureddine Krichene
Author: Istemi Berk
Author: Stanford University. Energy Modeling Forum