Formation of Conditional Expectations: Application to the World Oil Market

摘要

This paper draws on an application to the world oil market and US domestic supply/demand for oil and substitute forms of energy. The example here is motivated by the recent National Petroleum Council (NPC) study on the outlook for US oil and gas supply/demand. The NPC Committee received about 30 responses from industry, utility, government, consulting and financial community representatives (see Oil and Gas Journal, Sept. 24, 1986). The survey elicited responses on the world oil market outlook conditional on two refinery oil acquisition price trends. The upper price trend starts at $18/bbl in 1986 and has real price growth of 5%/yr, reaching $36/bbl in year 2000. The lower price trend starts at $12/bbl in 1986 and has a 4%/yr real growth, reaching $21/bbl in year 2000. (ERA citation 12:044987)