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| 1 |
ID:
126827
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2014.
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| Summary/Abstract |
We analyze oil export behavior by Saudi Arabia and the Rest of OPEC since 1973. In the literature there has been a wide range of estimates of their correlation: from positive, to zero, to negative. We find that the correlation has varied over time, from moderately high (0.7) in normal periods, to negative during each of five interruptions; the average correlation has been 0.19. Saudi Arabia's oil market behavior depends upon circumstances, but its primary goal is the stability of OPEC and the world oil market. It will coordinate export reductions with the Rest of OPEC when faced with declining demand, but it will increase exports when faced with interruptions elsewhere in OPEC. Allowing for such differences provides evidence of intelligent, context-dependent consistency. But ignoring context - by wrongly assuming the same Saudi response in Normal periods and Interruptions - can lead to a conclusion of Saudi "inconsistency" because the difference in the responses has been obscured.
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| 2 |
ID:
114290
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2012.
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| Summary/Abstract |
We analyze the rapid growth of Saudi Arabia's domestic oil consumption, a nine-fold increase in 40 years, to nearly 3 million barrels per day, about one-fourth of production. Such rapid growth in consumption - 5.7% annually, which is 37% faster than its income growth of 4.2% - will challenge Saudi Arabia's ability to increase its oil exports, which are relied upon in long-term world oil projections by the International Energy Agency (IEA), US Department of Energy (DOE) and British Petroleum (BP). However, these institutions assume unprecedented slowdowns in Saudi oil consumption - from 5.7% annual growth historically to less than 2% in the future - allowing them to project increases in Saudi oil exports. Using 1971-2010 data, we estimate that the income responsiveness (elasticity) of oil consumption is at least 1.5-using both Ordinary Least Squares regression and Cointegration methods. We believe that continued high growth rates for domestic oil consumption are more likely than the dramatic slowdowns projected by IEA, DOE and BP. This will have major implications for Saudi production and export levels.
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| 3 |
ID:
125787
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| Publication |
2013.
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| Summary/Abstract |
OPEC's domestic oil consumption has increased seven-fold in 40 years, to 8.5 million barrels per day (mbd). They consume almost as much oil as China. This constitutes one-fourth of their production. Such rapid growth in consumption (5.1% annually, faster than their income growth of 3.1%) will challenge OPEC's ability to increase their oil exports, which are relied upon in long-term world oil projections by the International Energy Agency (IEA), US Department of Energy (DOE/EIA) and British Petroleum (BP). However, these institutions assume unprecedented slowdowns in OPEC oil consumption - to less than 2% in the future - allowing them to project increases in OPEC oil exports with only modest increases in production. We analyze 1971-2010 data econometrically, with panel co-integration methods. We estimate that the income elasticity of consumption is about 1 for energy and oil. This means that OPEC's energy and oil consumption will grow as rapidly as their income. Hence, continued high growth rates for domestic oil consumption are more likely than the unprecedented slowdowns projected by IEA, DOE/EIA and BP - adding an extra 6 mbd of OPEC consumption in 2030. This will have major implications for OPEC production and export levels, and for world oil prices.
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| 4 |
ID:
098701
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2010.
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| Summary/Abstract |
Using data for 1971-2008, we estimate the effects of changes in price and income on world oil demand, disaggregated by product - transport oil, fuel oil (residual and heating oil), and other oil - for six groups of countries. Most of the demand reductions since 1973-74 were due to fuel-switching away from fuel oil, especially in the OECD; in addition, the collapse of the Former Soviet Union (FSU) reduced their oil consumption substantially. Demand for transport and other oil was much less price-responsive, and has grown almost as rapidly as income, especially outside the OECD and FSU. World oil demand has shifted toward products and regions that are faster growing and less price-responsive. In contrast to projections to 2030 of declining per-capita demand for the world as a whole - by the U.S. Department of Energy (DOE), International Energy Agency (IEA) and OPEC - we project modest growth. Our projections for total world demand in 2030 are at least 20% higher than projections by those three institutions, using similar assumptions about income growth and oil prices, because we project rest-of-world growth that is consistent with historical patterns, in contrast to the dramatic slowdowns which they project.
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