World Oil Depletion Models: Price Effects Compared with Strategic or Technological Interventions

In this paper we extend Guseo and Dalla Valle (2004) and Guidolin (2004) results by considering oil production as a diffusion model and we refer to special generalized Bass models (GBM) introduced by Bass et al. (1994). We use cumulative production data because the technical evaluation of reserves is not very reliable since the resources have been over estimated for financial reasons. To point out systematic shocks we include also intervention variables useful for separating stochastic disturbances from systematic changes in life-cycle behaviour possibly due to strategic effects, price effects, etc.. Weuse also the series of barrel prices to include economic theories of demand and supply. We briefly introduce the Generalized Bass model, its properties and the description of the intervention variables which can be included in the model. The model with three exponential shocks is briefly discussed together with the result that variations in oil prices have a subordinate role.