TY - BOOK ID - 80731027 TI - Optimal oil production and the world supply of oil AU - Aleksandrov, Nikolay. AU - Espinoza, Raphael A. AU - Gyurko, Lajos. AU - International Monetary Fund. PY - 2012 SN - 1589065700 1475568479 1299264492 1616359749 9781616359744 9781475568479 9781616354831 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Petroleum KW - Petroleum products KW - Petroleum reserves KW - Oil reserves KW - Oil supply KW - Petroleum supply KW - Reserves of petroleum KW - Oil fields KW - Mazut KW - Hydraulic fluids KW - Coal-oil KW - Crude oil KW - Oil KW - Caustobioliths KW - Mineral oils KW - Prospecting KW - Economic aspects. KW - Prices KW - Econometric models. KW - Reserves KW - Refining KW - Prospecting&delete& KW - Economic aspects KW - Prices&delete& KW - Econometric models KW - E-books KW - Investments: Energy KW - Macroeconomics KW - Taxation KW - Industries: Energy KW - Optimization Techniques KW - Programming Models KW - Dynamic Analysis KW - Nonrenewable Resources and Conservation: General KW - Energy and the Macroeconomy KW - Energy: Demand and Supply KW - Energy: General KW - Macroeconomics: Production KW - Price Level KW - Inflation KW - Deflation KW - Business Taxes and Subsidies KW - Investment & securities KW - Petroleum, oil & gas industries KW - Public finance & taxation KW - Oil prices KW - Oil production KW - Asset prices KW - Oil, gas and mining taxes KW - Commodities KW - Production KW - Taxes KW - Petroleum industry and trade KW - United States UR - https://www.unicat.be/uniCat?func=search&query=sysid:80731027 AB - We study the optimal oil extraction strategy and the value of an oil field using a multiple real option approach. The numerical method is flexible enough to solve a model with several state variables, to discuss the effect of risk aversion, and to take into account uncertainty in the size of reserves. Optimal extraction in the baseline model is found to be volatile. If the oil producer is risk averse, production is more stable, but spare capacity is much higher than what is typically observed. We show that decisions are very sensitive to expectations on the equilibrium oil price using a mean reverting model of the oil price where the equilibrium price is also a random variable. Oil production was cut during the 2008–2009 crisis, and we find that the cut in production was larger for OPEC, for countries facing a lower discount rate, as predicted by the model, and for countries whose governments’ finances are less dependent on oil revenues. However, the net present value of a country’s oil reserves would be increased significantly (by 100 percent, in the most extreme case) if production was cut completely when prices fall below the country's threshold price. If several producers were to adopt such strategies, world oil prices would be higher but more stable. ER -