Working Paper: NBER ID: w17759
Authors: James D. Hamilton
Abstract: This paper explores details behind the phenomenal increase in global crude oil production over the last century and a half and the implications if that trend should be reversed. I document that a key feature of the growth in production has been exploitation of new geographic areas rather than application of better technology to existing sources, and suggest that the end of that era could come soon. The economic dislocations that historically followed temporary oil supply disruptions are reviewed, and the possible implications of that experience for what the transition era could look like are explored.
Keywords: oil prices; economic growth; exhaustible resources
JEL Codes: O40; Q30; Q41; Q43
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increased demand from emerging economies (F69) | exacerbate future supply constraints (Q31) |
| geopolitical events (F52) | shaping production levels and pricing (L11) |
| global oil production has increased due to the exploitation of new geographic areas (L71) | decline of oil production may be imminent (Q31) |
| past economic dislocations following oil supply disruptions (N72) | expectations about future transitions in oil production (Q47) |
| oil supply disruptions historically resulted in significant economic downturns (Q43) | expectations about future transitions in oil production (Q47) |
| technological improvements have facilitated production (O49) | long-term decline pattern of oil fields has not fundamentally changed (L71) |