A petroleum life cycle model for the United States with endogenous technology, exploration, recovery, and demand

Authors:
  • GRGeorge P. Richardson
    George P. Richardson
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Abstract
This article describes a model of the life cycle of the petroleum resource in the United States. Expanding on prior system dynamic models of petroleum resources, the model endogenously generates the complete life cycle of the resource. It treats endogenously petroleum demand; the development of technology for, and investment in, exploration and recovery; discovery and production of petroleum; and the development of petroleum substitutes. With only two exogenous variables, GNP and the international petroleum price, the model portrays the evolution of the U.S. petroleum resource, and the associated industry, starting in 1870. The correspondence between simulated and actual data is examined through a variety of statistical measures. The model is used to show how the interaction between technological progress, depletion, imports, and the development of substitutes creates the life cycle by altering the dominance of the feedback processes in the system.

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