Oil and natural gas reserve prices, 1982-2002 : implications for depletion and investment cost
A time series is estimated of in-ground prices - as distinct from wellhead prices ₆ of US oil and natural gas reserves for the period 1982-2002, using market purchase and sale transaction information. The prices are a measure of the unit investment cost (long-run marginal cost) of creating new oil a...
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| Format: | Working Paper |
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MIT Center for Energy and Environmental Policy Research
2009
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| Online Access: | http://hdl.handle.net/1721.1/45009 |
| _version_ | 1811085403644493824 |
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| author | Adelman, Morris Albert Watkins, G. C. |
| author2 | Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. |
| author_facet | Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. Adelman, Morris Albert Watkins, G. C. |
| author_sort | Adelman, Morris Albert |
| collection | MIT |
| description | A time series is estimated of in-ground prices - as distinct from wellhead prices ₆ of US oil and natural gas reserves for the period 1982-2002, using market purchase and sale transaction information. The prices are a measure of the unit investment cost (long-run marginal cost) of creating new oil and gas reserves. The data are also used to examine the impact of reserves status (producing or not), the rate of production (R/P ratios) and of wellhead prices on reserve prices, and to reveal oil and natural gas price expectations embedded in reserve prices. Noticeable differences are disclosed between oil price expectations (ambiguous) and natural gas (positive). Estimates are made of current market values of US oil and gas reserves. Over the 21 year time span studied the trend in oil reserve prices is zero to mildly negative, that in natural gas is zero to mildly positive. All of these results -- the reserve prices themselves, their trends, and estimates of one year returns on holding reserve assets-- are incompatible with Hotelling doctrines. All these estimates refute the assumption of a fixed stock of hydrocarbons whose incessant decrease by production makes the still unproduced remainder constantly more valuable. The results are compatible with a process whereby investment adds to reserves even as production depletes them. |
| first_indexed | 2024-09-23T13:09:01Z |
| format | Working Paper |
| id | mit-1721.1/45009 |
| institution | Massachusetts Institute of Technology |
| last_indexed | 2024-09-23T13:09:01Z |
| publishDate | 2009 |
| publisher | MIT Center for Energy and Environmental Policy Research |
| record_format | dspace |
| spelling | mit-1721.1/450092019-04-10T11:14:36Z Oil and natural gas reserve prices, 1982-2002 : implications for depletion and investment cost Adelman, Morris Albert Watkins, G. C. Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. A time series is estimated of in-ground prices - as distinct from wellhead prices ₆ of US oil and natural gas reserves for the period 1982-2002, using market purchase and sale transaction information. The prices are a measure of the unit investment cost (long-run marginal cost) of creating new oil and gas reserves. The data are also used to examine the impact of reserves status (producing or not), the rate of production (R/P ratios) and of wellhead prices on reserve prices, and to reveal oil and natural gas price expectations embedded in reserve prices. Noticeable differences are disclosed between oil price expectations (ambiguous) and natural gas (positive). Estimates are made of current market values of US oil and gas reserves. Over the 21 year time span studied the trend in oil reserve prices is zero to mildly negative, that in natural gas is zero to mildly positive. All of these results -- the reserve prices themselves, their trends, and estimates of one year returns on holding reserve assets-- are incompatible with Hotelling doctrines. All these estimates refute the assumption of a fixed stock of hydrocarbons whose incessant decrease by production makes the still unproduced remainder constantly more valuable. The results are compatible with a process whereby investment adds to reserves even as production depletes them. 2009-04-03T17:05:49Z 2009-04-03T17:05:49Z 2003 Working Paper 2003-016 http://hdl.handle.net/1721.1/45009 56572362 MIT-CEEPR (Series) ; 03-016WP. 85 p application/pdf MIT Center for Energy and Environmental Policy Research |
| spellingShingle | Adelman, Morris Albert Watkins, G. C. Oil and natural gas reserve prices, 1982-2002 : implications for depletion and investment cost |
| title | Oil and natural gas reserve prices, 1982-2002 : implications for depletion and investment cost |
| title_full | Oil and natural gas reserve prices, 1982-2002 : implications for depletion and investment cost |
| title_fullStr | Oil and natural gas reserve prices, 1982-2002 : implications for depletion and investment cost |
| title_full_unstemmed | Oil and natural gas reserve prices, 1982-2002 : implications for depletion and investment cost |
| title_short | Oil and natural gas reserve prices, 1982-2002 : implications for depletion and investment cost |
| title_sort | oil and natural gas reserve prices 1982 2002 implications for depletion and investment cost |
| url | http://hdl.handle.net/1721.1/45009 |
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