Modeling and forecasting United States oil production along with the social cost of carbon: conventional and unconventional oil

Abstract

PurposeThe USA is one of the largest oil producers in the world. For this purpose, the authors model and predict the US conventional and unconventional oil production during the period 2000–2030.Design/methodology/approachIn this research, the system dynamics (SD) model has been used. In this model, economic, technical, geopolitical, learning-by-doing and environmental (social costs of carbon) issues are considered.FindingsThe results of the simulation, after successfully passing the validation test, show that the US unconventional oil production rate under the optimistic scenario (high oil prices) in 2030 is about 12.62 million barrels/day (mb/day), under the medium oil price scenario is about 11.4 mb/day and under the pessimistic scenario (low oil price) is about 10.18 mb/day. The results of US conventional oil production forecasting under these three scenarios (high, medium and low oil prices) show oil production of 4.62, 4.26 and 3.91 mb/day, respectively.Originality/valueThe contribution of this study is important in several respects: First, by modeling SD that technical, economic, proven reserves and technology factors are considered, this paper models US conventional and unconventional oil production separately. In this modeling, nonlinear relationships and feedback loops are presented to better understand the relationships between variables. Second, given the importance of environmental issues, the modeling of social costs of CO2 emissions per barrel of oil is also presented and considered as a part of oil production costs. Third, conventional and unconventional US oil production by 2030 is forecast separately, the results of this study could help policymakers to develop unconventional oil and plan for energy self-sufficiency.