Académique Documents
Professionnel Documents
Culture Documents
Lecture 15
Lawrence Livermore National Laboratory. All rights reserved. This content is excluded from our Creative Commons license. For more information, see http://ocw.mit.edu/fairuse.
13000 12000 11000 10000 9000 8000 7000 6000 5000 4000 3000 2000 1000
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
World primary energy consumption grew by 2.5% in 2011, less than half the growth rate experienced in 2010 but close to the historical average. Growth decelerated for all regions and for all fuels. Oil remains the worlds leading fuel, accounting for 33.1% of global energy consumption, but this figure is the lowest share on record. Coals market share of 30.3% was the highest since 1969.
Courtesy of BP Statistical Review of World Energy June 2012. Used with permission.
Source: Koonin, Steven. E. Whats Next in Energy? U.S. Energy Information Administration.
Topics
Economic theory of non-renewable resources
Pick t (or ts) to max discounted net revenue: (Pt MC)/(1 + R)t
If all the oil in the world is produced from oil wells exactly like yours, what will happen to the price of oil?
(Pt MC)/(1 + R)t = (P0 MC) > 0; (P MC) rises at interest rate If LHS < RHS, raise output today, which lowers todays price Note: P > MC despite competition; todays output lowers later revenue; there is an opportunity cost of producing today
6
Price
P0 C
P-c
Time (a)
Q0
Under those assumptions, when should you produce your oil? Doesnt matter
(MR MC) rises at rate R; P typically rises more slowly, so produce NOW
7
120 110 100 90 80 70 60 50 40 30 20 10 1861-69 1870-79 1880-89 1890-99 1900-09 1910-19 1920-29 1930-39 1940-49 1950-59 1960-69 1970-79 1980-89 1990-99 2000-09 2010-19 0
1861-1944 US average. 1945-1983 Arabian Light posted at Ras Tanura. 1984-2011 Brent dated.
Courtesy of BP Statistical Review of World Energy June 2012. Used with permission.
End 1976 to end 2009, US proved reserves 10.26 B bbl.; production? Production during that period was 78.45 B bbl.
Depletion: Costs of finding, extracting likely to rise as more is produced from any given area (e.g., US).
Innovation: Technologies for finding, extracting improve over time a race with depletion.
Uncertainty: Future demand, supply are not known.
SR Inflexibility: Simple model over-states flexibility in output choice little SR supply flex for oil + inelastic demand SR P volatility.
Cartel Behavior: OPEC behavior is complicated Politics: Why else drill miles deep, miles offshore when it is much cheaper to produce in the Middle East?
9
Active spot and futures markets, with good data; the latter used for hedging and speculation
Production is concentrated geographically, reserves even more so; much of both in unstable nations
OPEC is a cartel of the big (national) oil firms, power has varied; Saudi Arabia has historically been the main holder of excess capacity As we have seen, price has been volatile since the 1973-74 embargo
10
23.7 29.5
2 298.2 48.6
35.5 57.6 68.3 18.4 95.5 41.1 111.2 26. .0 .0 49 5 49.5 28.4 28 28.4 4 13 1 137 137.8 37 61.1 110. 0. 0.7 226.6 34.3 61.5 28.4 22.1 12 26.0 175.1 51 5.1
US Canada Mexico S. & Cent. America Europe & Eurasia Middle East Africa Asia Pacic
15.6
Courtesy of BP Statistical Review of World Energy June 2012. Used with permission.
11
Asia Pacific Africa Middle East Europe & Eurasia S. & Cent. America North America
100
90
80
70
60
50
40
30
20
10
86
91
96
01
06
11
Courtesy of BP Statistical Review of World Energy June 2012. Used with permission.
12
Middle East Europe & Eurasia Asia Pacic Africa North America S. & Cent. America
3.6 5.2
38.4
4.2
42.1
7.0
4.6
7.8 8.0
32.6
7.7
7.1
37.8 33.7
Courtesy of BP Statistical Review of World Energy June 2012. Used with permission.
13
14
Companies ranked in order of 2007 worldwide oil equivalent oil/gas reserves as reported in "OGJ 200/100", Oil & Gas Journal, September 15, 2008.
Courtesy of Oil & Gas Journal. Used with permission.
15
Long-term contracts dominate; spot and (since 2001) futures markets less important
Huge recent increase in Chinese use of coal
16
Leading Exporters, 2010 Country Share Australia 27.1 Indonesia 26.1 Russia 10.1 U.S. 6.9
Leading Importers, 2010 Country Share Japan 17.5 China 16.6 S. Korea 10.7 India 8.6
18
1998
1999 2000 2001 2002 2003 2004
32.00
28.79 35.99 39.03 31.65 43.60 72.08
31.00
31.29 29.90 50.15 33.20 38.52 64.90
50.76
42.83 39.69 41.33 42.01 41.57 60.96
40.51
35.74 34.58 37.96 36.90 34.74 51.34
2005
2006 2007 2008 2009 2010
60.54
64.11 88.79 147.67 70.66 92.50
70.12
62.96 51.16 118.79 68.08 71.63
89.33
93.46 88.24 179.03 167.82 158.95
62.91
63.04 69.86 122.81 110.11 105.19
*Source: McCloskey Coal Information Service. Prices fo 1990-2000 are the average of the monthly marker, 2001-2010 the average of weekly prices. **Source: Platts. Prices are for CAPP 12,500Btu, 1.2 SO2 coal, fob. Prices for 1990-2000 are by coal price publication date, 2001-2010 by coal price assessment date. Note: CAPP = Central Appalachian; cif = cost + insurance + freight (average prices); fob = free on board.
19
Asia Pacific Africa Middle East Europe & Eurasia S. & Cent. America North America
4000
3500
3000
2500
2000
1500
1000
500
86
91
96
01
06
11
0
20
Courtesy of BP Statistical Review of World Energy June 2012. Used with permission.
22
44% from Australia and Canada 33% from Kazakhstan, Russia, & Uzbekistan
Gas can be moved by pipeline, but must be liquified (expensive) to go by ship (LNG); market is not global
US supplies: 84% domestic, 12% Canadian
If exploited, serious market & CO2 impacts, but also serious environmental issues.
24
117.1
66.4 23.5 88.0 26.6 3.9 15.7 14.1 3.8 16.8 44.1 35.2 4.4 12.1 10.2 17.3 13.5
5.0
19.0
6.7 9.7
6.3
3.0
7.6
US Canada Mexico S. & Cent. America Europe & Eurasia Middle East Africa Asia Pacic
Courtesy of BP Statistical Review of World Energy June 2012. Used with permission.
25
3500
3000
2500
2000
1500
1000
500
86
91
96
01
06
11
86
Courtesy of BP Statistical Review of World Energy June 2012. Used with permission.
26
Proved Reserves: Russia 24%, Middle East 40%, US 5% This picture will change
Distribution of proved reserves in 1991, 2001 and 2011
Percentage
Middle East Europe & Eurasia Asia Pacic Africa North America S. & Cent. America
3.6 5.2
38.4
4.2
42.1
7.0
4.6
7.8 8.0
32.6
7.7
7.1
37.8 33.7
Courtesy of BP Statistical Review of World Energy June 2012. Used with permission.
27
The Henry Hub is in south-central Louisiana; a junction of 13 pipelines; 28 the pricing point for futures contracts.
US Henry Hub Average German Import Price cif UK NBP Japan LNG cif
14
12
10
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
Courtesy of BP Statistical Review of World Energy June 2012. Used with permission.
29
For information about citing these materials or our Terms of Use, visit: http://ocw.mit.edu/terms.