ISSN:
1572-9338
Keywords:
Depletable non-renewable resources
;
marginal cost
;
technological progress
;
depletion of reserves
;
constrained least squares regression
Source:
Springer Online Journal Archives 1860-2000
Topics:
Mathematics
,
Economics
Notes:
Abstract The gradual exhaustion of existing deposits of a depletable non-renewable resource such as oil tends to shift the supply price curve of the resource upwards, increasing its marginal cost. Advances in technologies for exploration and production act as a brake on such upward shifts. Thus, there is a tug-of-war between the gradual exhaustion of existing deposits and technological progress. Using a recently developed constrained least-squares regression technique, we demonstrate that technological progress was the dominant force of the two during the first part of this century, causing a secular drop in marginal costs, but that this situation eventually was reversed, and that the gradual exhaustion of deposits gained the upper hand, causing marginal costs to increase. The turning point occurred around 1971–72. We also discuss the forecasting of the possible current upward drift of marginal costs.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1007/BF02207224
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