The future of oil: Geology versus technology

We discuss and reconcile the geological and economic/technological views concerning the future of world oil production and prices, and present a nonlinear econometric model of the world oil market that encompasses both views. The model performs far better than existing empirical models in forecasting oil prices and oil output out-of-sample. Its point forecast is for a near doubling of the real price of oil over the coming decade, though the error bands are wide, reflecting sharply differing judgments on the ultimately recoverable reserves, and on future price elasticities of oil demand and supply. (c) 2014 International Institute of Forecasters. Published by Elsevier B.V. All rights reserved.