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    Export Land Model Example!

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    lupas100
    1) An exporting nation is modeled over 9 years, showing a 5% annual production decline and 3% annual domestic consumption growth, leading to a significant annual decline in exports. 2) After 9 years, the exporting nation will become an importer as domestic consumption exceeds production. As more exporters become importers, competition for remaining exported supplies will increase prices. 3) The high oil prices reflect the willingness of importing nations to outbid each other for limited exported supplies, not underlying production costs, as exporting countries prioritize domestic economic growth over exports.

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    Export Land Model Example!

    Uploaded by

    lupas100
    85 views1 page
    1) An exporting nation is modeled over 9 years, showing a 5% annual production decline and 3% annual domestic consumption growth, leading to a significant annual decline in exports. 2) After 9 years, the exporting nation will become an importer as domestic consumption exceeds production. As more exporters become importers, competition for remaining exported supplies will increase prices. 3) The high oil prices reflect the willingness of importing nations to outbid each other for limited exported supplies, not underlying production costs, as exporting countries prioritize domestic economic growth over exports.

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    Example of ELM

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    1) An exporting nation is modeled over 9 years, showing a 5% annual production decline and 3% annual domestic consumption growth, leading to a significant annual decline in exports. 2) After 9 years, the exporting nation will become an importer as domestic consumption exceeds production. As more exporters become importers, competition for remaining exported supplies will increase prices. 3) The high oil prices reflect the willingness of importing nations to outbid each other for limited exported supplies, not underlying production costs, as exporting countries prioritize domestic economic growth over exports.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
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    Download as pdf or txt
    85 views1 page

    Export Land Model Example!

    Uploaded by

    lupas100
    1) An exporting nation is modeled over 9 years, showing a 5% annual production decline and 3% annual domestic consumption growth, leading to a significant annual decline in exports. 2) After 9 years, the exporting nation will become an importer as domestic consumption exceeds production. As more exporters become importers, competition for remaining exported supplies will increase prices. 3) The high oil prices reflect the willingness of importing nations to outbid each other for limited exported supplies, not underlying production costs, as exporting countries prioritize domestic economic growth over exports.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
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    of 1

    Assumptions

    Exporting Nation (Dennesland :P) Decline Rate % 0.95 5% decline rate


    Year Production Consumption Exports Consumption Growth 1.03 3% domestic growth
    1 2 1 1 Export Decline -27% WoW
    2 1.9 1.03 0.87
    3 1.805 1.0609 0.7441
    4 1.71475 1.092727 0.622
    5 1.6290125 1.12550881 0.5035
    6 1.547561875 1.159274074 0.3883
    7 1.470183781 1.194052297 0.2761
    8 1.396674592 1.229873865 0.1668
    9 1.326840863 1.266770081 0.0601
    Analysis of Data
    Export Land Model Notice that production decline is at 5%/yr
    Export decline is 27%/yr which is very
    signficant to the production decline.

    2.5 After 9 years this country will start importing


    Million Barrels of Oil

    oil from other exporting nations.


    What I produce
    2
    Mexico is the 2nd largest exporter of oil
    Production to the United States. By 2014 they will
    1.5 export ZERO oil to USA and will import oil.
    Consumption
    1 Exports The high oil prices is not the price of oil
    Domestic Consumption that is used around the world, but it's the
    0.5 I now Import oil and bid
    price that importing nations are willing to
    What I export to other pay for other nations to export them the oil.
    countries against other countries
    0 When more exporting nations become
    importing countries then more players are
    1 2 3 4 5 6 7 8 9 bidding up the remaining supplies of
    Years declining oil exports.

    Conclusion
    Oil prices have touched $80/barrel last week and blew past it. Many are screaming on TV
    That the "demand" fundamentals don't justify the current oil price. What these pundits don't realize
    is it's not how much oil is produced, but how much oil is left to export! Countries rich in oil exports are
    rapidly growing their economies and there will be less and less oil left after their domestic consumption
    to export overseas to the mature developed nations. If these net importing countries want the oil then
    they have to pay a higher price to have the exporting nation to give up some economic growth. This cost is
    increasing as these countries are able to utilize the oil more efficiently and demand higher prices!
    When these exporting nations run out of oil to export then they will join the world markets in bidding
    the remaining oil left to export!

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