Title: World Oil Depletion: Diffusion Models, Price Effects, Strategic and Technological Interventions
1World Oil Depletion Diffusion Models, Price
Effects, Strategic and Technological Interventions
5-th International ASPO Conference, San Rossore,
18-19 July 2006, Italy
Renato Guseo
Department of Statistical Sciences
University of Padova, Italy
2World Crude Oil Production
Thousand barrels daily
Global
OPEC
FSU
CSI
USA (NGL)
3World Production and Prices
Fonte BP Statistical Review of World Energy, 2004
Produzione e prezzi del petrolio
4Growth and Development after World War II
-1-
- Cohen, J.E. (2003) Human Population The next
Half Century, Science, 203, 1172-1175 - Exceptional demographic expansion
- Rural population peak in rich countries 1950
- Increse of world average life 30 years in 1900
and 65 years in 2000 - Population 6.3 billion in 2004 United Nations
Population Division 8.9 billion in 2050 (ex
medium variant scenario forecasting) - Regional population contraction in 2050
Japan -24 Italy -22 FSU -29
5Growth and Development after World War II
-2-
- USA dominance in oil estraction and refining
shock 1918 (positive with local memory) - Decisive military advantage. Competitive
advantage after World War II - American way of life
- Energetic Surplus based on cheap crude oil
- Structural change in sustainable economic
evolution based on non-renewable resources
6Growth and Development after World War II
-3-
- Today risk physical restrictions towards
expansion in oil production due to emergent
demand by China and India - Risk of a late migration towards renewable
energetic resources - Emerging technologies are not completely
sustainable and efficient (fuel-cells, hydrogen,
photovoltaic systems, solar thermal systems,
eolic systems, etc.).
7Recent strategic researches
- Morse, E.L. e Jaffe, A.M. (2001). Strategic
Energy Policy Challenges for the 21st Century
(2000 - aprile 2001) James A. Baker III
Institute for Public Policy of Rice University,
Texas Council of Foreign Relations of USA - National Energy Policy Development Group, (2001,
Task Force supervised by D. Cheney). - USA energetic policy since 1940 security -
- Global Economic growth based on a production
surplus with cheap prices - New emerging world oil demand
- Supply dependence (Midle East).
8Non-Renewable Resources Depletion Hubbert and
recent developtments
- Hubbert, M.K. (1949). Energy from fossil fuels,
Science, 4, 103-109. - In 1956 Hubbert forecasts the peak of annual
production within 48-lower states in USA by
year 1970 - Campbell, C. e Laherrère, J. (1998). The End of
Cheap Oil, Scientific American, March 1998. - Laherrère, J. (2003). Modelling future oil
production, population and the economy, ASPO 2nd
international workshop on oil and gas, Paris,
26-27. - ASPO (Association for the Study of Peak Oil and
Gas)
9Economic and financial estimation of oil
reserves inflated figures
- Warranties on international long-term loans
- Investments on production plants
- OPEC restrictions overcoming export is
proportional to the declared reserves.
10Ultimate Recoverable Resouce URR
- URR total amount of a finite resource obtainable
at the end of extraction process - Geologic estimates of Oil URR during the life-
cycle of resource extraction - Production to date. Oil heterogeneity. (weight
100) - Proven reserves. Ex-post recovery factor 35 is
a median and todays variability is very large.
Revision principles and reserves growth (USGS)
enlarge uncertainties - Probable and possible reserves undiscoverd
petroleum based on subjective assessments
(probability, e.g. 5).
- Could we do a simple weighted sum of such
components? - Probably not
11Recent statistical modeling
- Guseo, R. (2004) Interventi strategici e aspetti
competitivi nel ciclo di vita di innovazioni,
Working Paper Series, 11, Department of
Statistical Sciences, University of Padua. - Guidolin, M. (2004) Cicli energetici e diffusione
delle innovazioni. Il ruolo dei modelli di
Marchetti e di Bass, Thesis, University of Padua. - Guseo, R and Dalla Valle, A. (2005) Oil and Gas
Depletion Diffusion Models and Forecasting under
Strategic Intervention, Statistical Methods and
Applications, 14(3), 375-387 - Guseo, R., Dalla Valle, A. and Guidolin, M.
(2006) World Oil Depletion Models Price effects
compared with strategic or technological
interventions, Technological Forecasting and
Social Change (in press) - Guseo, R. (2006) Bass-let Detection of Automobile
Successive Generations Evidence from the Italian
Case (submitted).
12Crude Oil Production Diffusion of an Innovation
- Oil production is modulated by the dynamics of
international demand - Oil demand is a function of the diffusion
processes related to basical technologies
(transport, chemical industries, heating, etc.) - Diffusion of technological innovations is
conditioned by social communication structure
innovators and imitators (word-of-mouth)
13Bass Equation BM
- z(t) mf(t) mpqF(t)1-F(t) or
- z(t) pm(q-p)z(t) - (q/m) z(t)2 (Riccati)
- z(t)mf(t) (instantaneous adoptions)
- f(t)F(t)
- z(t)m F(t) (cumulative adoptions)
F(t)z(t)/m - f(t)/1-F(t)pqF(t) Bass Hazard rate
- mpotential market carrying capacity URR
- pinnovation coefficient, pgt0
- qimitation coefficient, qgt0
14Normalized Bass models BM and GBM
- BM f(t)/1-F(t)pqF(t)
Standard - GBM f(t)/1-F(t)pqF(t) x(t)
GBM - x(t) is a quite general intervention function
integrable, positive and centered around
unitary neutral pole 1. - Representation of temporal price variations, of
advertising pressure, of political, strategic,
legal, environmental interventions.
15Equation Solution GBM
Exp. shocks
Rect. shocks
Mixed shocks
16Great Britain GBM, 2 mixed sh.
Estimation method Marquardt Estimation stopped
after maximum iterations reached. Number of
iterations 31 Number of function calls
330 Estimation Results
Asymptotic 95,0
Asymptotic
Confidence Interval Parameter
Estimate Standard Error Lower
Upper --------------------------------------------
-------------------------------- m
4513,39 154,806 4196,77
4830,0 p 0,0000708436
0,0000324773 0,00000441993 0,000137267 q
0,111872 0,00516425
0,10131 0,122434 c1
8,54019 1,02935 6,43493
10,6454 b1 -0,250721
0,0114596 -0,274159 -0,227284 a1
10,7677 0,458356
9,83028 11,7052 c2
-0,331417 0,0175489 -0,367309
-0,295526 a2 23,4341
0,190843 23,0438 23,8245 b2
28,6819 0,164258 28,3459
29,0178 ------------------------------------
---------------------------------------- Analysis
of Variance Source Sum of Squares
Df Mean Square Model
6,52091E7 9 7,24545E6 Residual
657,546 29 22,674 ----------------
------------------------------------- Total
6,52097E7 38 Total (Corr.)
3,31712E7 37 R-Squared 99,998
percent R-Squared (adjusted for d.f.) 99,9975
percent Standard Error of Est. 4,76172 Mean
absolute error 3,10566 Durbin-Watson statistic
0,889298
Positive Shock with local memory
17Great Britain analysis
- The saddle 1987-1991-1999 is perfectly absorbed
by a rectangular shock - a) Petroleum Reven Tax modification
- b) pipelines restructuring 1986-1991 symmetric
behaviour confirms ordinary regime - c) partial production stall due to the reduction
of new discoveries.
18USA 48 lower States and Alaska,one exponential
shock
Estimation Results -------------------------------
---------------------------------------------
Asymptotic 95,0
Asymptotic Confidence
Interval Parameter Estimate
Standard Error Lower
Upper --------------------------------------------
-------------------------------- m
224,885 0,784401 223,328
226,442 p 0,000445866
0,0000177788 0,000410571 0,000481162 q
0,0571941 0,000403937
0,0563922 0,057996 c1
0,682617 0,0735348 0,536632
0,828602 b1 -0,0852885
0,00948373 -0,104116 -0,0664609 a1
18,0477 0,981086
16,1 19,9954 -------------------------------
--------------------------------------------- An
alysis of Variance -------------------------------
---------------------- Source Sum of
Squares Df Mean Square ------------------
----------------------------------- Model
735809,0 6 122635,0 Residual
7,39124 95
0,0778026 ----------------------------------------
------------- Total 735817,0
101 Total (Corr.) 352880,0
100 R-Squared 99,9979 percent R-Squared
(adjusted for d.f.) 99,9978 percent Standard
Error of Est. 0,278931 Mean absolute error
0,207909 Durbin-Watson statistic 0,173839
Positive shock with local memory
19USA 48 lower States and Alaska, ARMAX(4,0,2)
sharpening
Forecasting - barili Analysis Summary Data
variable barili Number of observations
101 Start index 1,0 Sampling interval
1,0 Forecast Summary ---------------- Forecast
model selected ARIMA(4,0,2) 1 regressor Number
of forecasts generated 40 Number of periods
withheld for validation 0
ARIMA Model Summary Parameter
Estimate Stnd. Error t
P-value ------------------------------------------
---------------------------------- AR(1)
1,21416 0,691695 1,75534
0,082426 AR(2) -0,140994
1,11031 -0,126986 0,899220 AR(3)
-0,146337 0,49692
-0,294488 0,769028 AR(4)
-0,132467 0,0891259 -1,48629
0,140514 MA(1) 0,591549
0,68527 0,863235 0,390183 MA(2)
0,299352 0,650254
0,460362 0,646308 DIFF(PREDbe1)
0,20426 0,0890786 2,29303
0,024052 -----------------------------------------
----------------------------------- Backforecastin
g yes Estimated white noise variance
0,00495321 with 95 degrees of freedom Estimated
white noise standard deviation 0,0703791 Number
of iterations 17
Shock 1918
20Alaska ARMAX(2,0,1) sharpening
ARIMA Model
Summary Parameter Estimate Stnd.
Error t P-value ----------------
--------------------------------------------------
---------- AR(1) 0,323713
0,100318 3,22686 0,002667 AR(2)
-0,172177 0,054492
-3,15967 0,003195 MA(1)
-0,818595 0,102552 -7,98224
0,000000 PREDbme1 0,847508
0,0501864 16,8872 0,000000 Mean
-0,0143829 0,0282678
-0,508809 0,613990 Constant
-0,0122034 ---------------------------------
------------------------------------------- Backfo
recasting yes Estimated white noise variance
0,00281514 with 36 degrees of freedom Estimated
white noise standard deviation 0,0530579 Number
of iterations 20
21World Oil dataDaily Production
Sources
- Industriedatenbank 2001 (1900 1986)
- BP Statistical Review of World Energy (1987-
2002)
22GBM x(t) pure prices control
23GBM exp shocks price effect
24Guidolin (2004) GBM, 2 exp shocks
25GBM 3 exp shocks (memory persistence)
26GBM 3 exp shocks estimates(memory persistence)
q/p 608 ? Qp1
27World Oil Depletion GBM with three shocks vs
Hubbert-Bass
Oil Peak 2007
URR1524 Gbo
Depletion time 95 2023
Depletion time 90 2019
28Oil market Operators prices growth
- Demand and supply self-control similar to 1973
and 1979-83 behaviour. Extension of crude oil
economic life cycle - Limited techonological efficiency margins due to
the improvementes of 70s , 80s and 90s - Savings through life styles modification this
is the central dilemma in industrialized
countries - Sluggishness of middle class whose life style is
based on an expected irreversible and indefinite
growth and development.
29New Emergent Economies
- Increase in crude oil requirements by recent
emergent economies China, India, and other
Asiatic countries - US EIA (Energy Information Administration)
forecasts a world oil demand of 40 Gbo/year
(or 109.6 milion daily barrels) in 2020 - Guseo, Dalla Valle, Guidolin (2006) and Bakhtiari
(2004) forecast, in 2019-20, only 55 milion daily
barrels.
30Crude Oil Area consumption
31Outlook
- Nuclear fission perspective is probably a tardy
strategy with known collateral externalities. A
new plant in Italy can be launched after 13-15
years - Technological, political and economic efforts
must be distributed in different areas
photovoltaic, solar thermal, bio-fuel, biomass,
eolic, hydrogen, etc. - Electric sector distributed investments
(photovoltaic, micro-cogeneration, etc.). - Individual and collective mobility.
-
32World Oil Depletion GBM with three shocks vs
Hubbert-Bass vs five shocks scenario
33World Oil Depletion GBM with three shocks vs
five shocks vs four shocks scenarios
Shock 2008 (sim. 1951)
Depletion time 90 2017