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LAB 1.5 Final
LAB 1.5 Final
ABSTRACT
In the experiment, the U.S. and world crude oil production was modelled using a logistic
growth model from year 1920-24 to 2005-08. In the U.S. crude oil production, two models with
carrying capacities 200- and 300-billion barrels were compared to the actual data and
theoretical model resulting the model with 200 carrying capacity to be more accurate. On the
other hand, for the world oil production, two models with carrying capacities, 2.1 and 3 trillion
barrels were also determined along with the time when the rate of production of oil reaches
their maximum, which were both 5 years from 1920-24, 1925-29. It was also concluded that
an increase in price affects these models by the increase in growth rate and decreasing the
carrying capacity.
I. INTRODUCTION
According to Deffeyes (2001), global oil production reached a peak sometime during last
decade. After the peak, the world’s production of crude oil will fall, never to rise again. The
world will not run out of energy, but developing alternative energy sources on a large scale
will take at least 10 years. The slowdown in oil production may already be beginning; the
current price fluctuations for crude oil and natural gas may be the preamble to a major crisis.
There are two things that are clear about crude oil. One is that we use a lot of it. The world
consumption of crude oil is approximately 80 million barrels per day, and world consumption
grew by 3.4% in 2004. The other is that the earth’s oil reserves are finite. The processes that
created the crude oil that we use today are fairly well understood. There may be significant
deposits of crude oil yet to be discovered, but it is a limited resource.
Governments, economists, and scientists argue endlessly about almost every other aspect
of oil production. Exactly how much oil is left in the earth and what fraction of that oil can or
will ever be removed is difficult to estimate and has significant financial ramifications.
Substantial disagreement on oil policy is not surprising.
Predictions of the decline in production are notoriously difficult, and it is easy to find
examples of such predictions that ended up being absurdly wrong. On the other hand,
sometimes predictions of decline in production are accurate. In Hubbert’s Peak, Kenneth
Deffeyes recounts the work of geologist M. King Hubbert. Hubbert fits a logistic model to the
production data for crude oil in the United States. Using production data up to the mid 1950s
along with approximations of the total amount of recoverable crude oil, Hubbert predicted that
production would peak in the U.S. in the 1970s. Research said, he was right. The method he
used will thus be integrated in this experiment (Blanchard, Devaney, & Hall, 2011).
Logically, the decline in supply of crude oil will certainly result in an increase in price of
oil products. This price increase will provide more funds for crude oil production, perhaps
slowing the rate of decline. Hence, this factor is mostly considered in modelling oil
productions. In this lab we will model the U.S. and world crude oil production using a logistic
model, where the carrying capacity represents the total possible recoverable crude oil.
II. OBJECTIVES
The general objective of the study is to model the U.S. and world crude oil production
using a logistic model. Specifically, the study aims to:
A. Model the crude oil production of the U.S. by assuming that the total amount of
recoverable crude oil in the U.S. are 200 and 300 billion barrels;
B. Model the world crude oil production based on estimates of total recoverable crude
oil (past and future) of 2.1 trillion barrels and of 3 trillion barrels;
i. Using the models, predict when do the rate of production of oil reaches its
maximum;
ii. Describe how price increase might affect the predictions of the model for world
oil production; and
iii. Modify the model to reflect these assumptions.
III. METHODOLOGY
The development of the logistic model of U.S. and world crude oil productions will be
based on the following data shown in the table below.
dP P
k 1 P
dt N
where
dP
: the change between U.S. Oil production per five year periods
dt
P : Population
k : growth-rate coefficient for population P
Using separation of variables, it can be shown that the solution of the logistic equation is as
follows:
dP P
k 1 P
dt N
dP N P
k P
dt N
dP k
dt
PN P N
P t
N
1 Ce kt
where C is an arbitrary constant that represents the parameter which depends on the initial
condition P0.
Firstly, using the method above, the parameter values for a logistic differential equation
that fit the crude oil production data for the U.S. (see Table 1) are determined. Secondly, the
model of the crude oil production of U.S. assuming that the total amount of recoverable crude
oil in the U.S. is 200 billion barrels is calculated. This assumption includes what has already
been recovered and serves the role of the carrying capacity in the logistic model. This will also
be repeated by replacing 200 billion barrels with 300 billion barrels. Thirdly, the model of the
world crude oil production based on estimates of total recoverable crude oil (past and future)
of 2.1 trillion barrels and of 3 trillion barrels are also made. (Both of these estimates are
commonly used. They are based on differing assumptions concerning what it means for crude
oil to be “recoverable.”). Aside from these, the time when the models’ rate of production of oil
reaches its maximum is also predicted. And lastly, a description of how price increase might
affect the predictions of the model for world oil production are explained.
1 dP
Figure 1: U.S Oil Production versus P
p dt
k
m
N
0.1241
0.0008
N
N 155 .125
Getting C,
N Po
C
Po
155 .125 2.9
C
2 .9
C 52 .49138
The theoretical logistic model then derived from the actual data is
Pt
N
1 Ce kt
Pt
155 .125
1 52.49138 e 0.1241t
Plotting it,
Figure 2: Graphical representation of the U.S. Oil Production using
the Theoretical Model
In figure 3, the theoretical model fit with the actual data from time 0 to 17, approximately.
From that point onwards, they started deviating from each other. That being said, it can be
concluded that predicting both the growth rate and the total amount of recoverable crude oil
from the data is difficult. Hence, a given N with values 200 and 300 billion barrels are assumed.
The models derived from these, will then be fitted against the actual production values to
determine which is more accurate.
i. Using 200 billion barrels as the total amount of recoverable crude oil in the U.S.
At year 1920-24, we let P(0) = 2.9 and t = 5 years to calculate C and k which are the parameters
values to get the logistic equation.
For U.S. Oil production, the initial condition is assumed: at year 1920-24, we let P(0) = 2.9 and
t = 5 years. From this data, the value of growth-rate constant, k, and the arbitrary constant, C,
is determined;
1 N Po
t ln
k Po
1 200 2.9
k ln
5 2.9
k 0.8438000954
k 0.8438
For C,
N P0
C
P0
200 2.9
C
2.9
C 67.96551724
C 67.9655
200
P
1 67.9655 e 0.8438t
It was stated by Blanchard et al. (2011) that P(t) increases if 0 < P < N. The same is
observed in the figure above, the curve increased upward given the conditions 0 < P < N from
Table 1. This model approached and leveled off at the carrying capacity N = 200 billion barrels.
ii. Using 300 billion barrels as the total amount of recoverable crude oil in the U.S.
The differential logistic equation with 300 billion barrels carrying capacity is
dP P
k 1 P
dt 300
Determining the parameter value of k and C given that the total amount of recoverable crude
oil N,
1 N Po
t ln
k Po
1 300 2.9
k ln
5 2.9
k 0.9258716091
k 0.9259
Getting C,
N P0
C
P0
300 2.9
C
2.9
C 102 .4482759
C 102 .448
300
P
1 102 .448e 0.9259t
Graphing it,
dP P
k 1 P
dt 2100
In this analysis, 2.1 trillion barrels will be used as N. For this production, the initial
conditions are: at year 1920-24, P(0) = 4.3 and t = 5 years, calculating for k
1 N Po
t ln
k Po
1 2100 4.3
t ln
5 4.3
k 1.237805577
k 1.238
Determining C
N P0
C
P0
2100 4.3
C
4.3
C 487 .372093
C 487.372
2100
P
1 487 .372 e 1.238t
Plotting it,
1 N Po
t ln
k Po
Hence, for the world crude oil production, the time to peak oil production is
1 2100 4.3
t ln
1.238 4.3
t 5 years
Overall, the model predicted that 5 years from 1920-24, which was 1925-29, the world crude
oil production will reach its peak. On this year,
N
P
2
2100
P
2
P 1050 billion barrels
ii. Using 3 trillion barrels as the total amount of recoverable crude oil in the world
Using the total amount of recoverable crude oil N equal to 3 trillion barrels
dP P
k 1 P
dt 3000
With the same set of initial conditions as that of N = 2.1 trillion barrels, the value of k is
calculated as
1 N Po
t ln
k Po
1 3000 4.3
t ln
5 4.3
k 1.309263637
k 1.309
For C
N P0
C
P0
3000 4.3
C
4.3
C 696 .6744186
C 696 .674
3000
P
1 696.67e 1.309t
Calculating the time for the models’ rate of production of oil to reach its maximum
1 N Po
t ln
k Po
1 3000 4.3
t ln
1.309 4.3
t 5 years
The model predicted that 5 years from 1920-24, which was also 1925-29, the world crude oil
production will reach its peak.
N
P
2
3000
P
2
P 1500 billion barrels
Economically, the decline in production of crude oil will certainly result in an increase in
price of oil products. This price increase will provide more funds for crude oil production,
perhaps slowing the rate of decline. This increase in price affects the model by the increase in
the growth rate and decreasing the limiting value, or the total recoverable crude oil.
V. CONCLUSION
In the experiment, the U.S. and world crude oil production was modelled using a logistic
growth model from year 1920-24 to 2005-08. In the U.S. crude oil production, two carrying
capacities were given, which were 200- and 300-billion barrels. Their growth rates k were
determined to be 0.8438 and 0.9259, respectively. The models were compared to the actual
data and the theoretical model, also a logistic model generated from the actual data having a
carrying capacity of 155.125 billion barrels, to determine their accuracy. Unfortunately, they
were both far from these two curves. That being said, the model with carrying capacity of 200
is more accurate, since it was the nearest of the two.
On the other hand, for the world oil production, two carrying capacities were also given.
These are 2.1 and 3 trillion barrels. The model of these two were determined along with the
time when the rate of production of oil reaches their maximum. These two models predicted
an equal value which was 5 years from 1920-24. 1925-29. And lastly, in determining the effect
of price increase, it was concluded that an increase in price affects the model by the increase
in the growth rate and decreasing the limiting value, or the total recoverable crude oil.
VI. REFERENCES
[1] Blanchard, P., Devaney, R. L., & Hall, G. R. (2011). Differential Equations . Boston:
CENGAGE Learning.
[2] Deffeyes, K. S. (2001). Hubbert’s Peak The Impending World Oil Shortage. New
Jersey: Princeton University Press.