Three essays in natural resource economics

It is important to know what is the best way to model the supply of oil and what are the factors that determine the supply of oil since oil is a main source of energy. This dissertation addresses three issues of natural resource economics with respect to the supply of oil. Existing oil supply models fall into three broad categories: geologic or engineering, econometric, and hybrid models. In this dissertation, we apply two different methods to model the supply of oil: econometric and hybrid models. We also test a basic principle of natural resource economics. The prevailing method of forecasting oil prices is based on the most popular principle of natural resource economics, Hotelling's rule. We test the Hotelling rule.;In a pure economic model of oil supply, the extraction and exploration equations for non-OPEC and OPEC countries are derived and estimated. We assume that OPEC countries act as a cohesive cartel, while non-OPEC countries are the competitive fringe. We found that non-OPEC countries fit this method of estimation. However, OPEC countries do not fit this method of estimation. The physical factors in extraction and exploration processes turn out to play the dominant role.;In the long run, the Hotelling rule implies that the rate of change in user cost and the rate of interest should be cointegrated. We found that the user cost, the wellhead price of oil, and the rate of interest are nonstationary. We fail to find a cointegration relationship between the interest rate and the rate of change in user cost or the wellhead price of oil. This implies that the exhaustibility of natural resources such as oil may not be the principle determinant of oil price.;Models of the supply of oil which combine economic and geological techniques are called hybrid models. Hybrid models give better results than using engineering or economic analysis independently. The estimated production rate, which takes into account engineering as well as economic factors in oil production, closely follows the actual oil production rate for the United States and Saudi Arabia.