The Oil Endgame: Strategies of Oil Exporters in a Carbon-Constrained World

Forthcoming in Environmental Science and Policy

27 Pages Posted: 6 Aug 2015

Date Written: August 6, 2015

Abstract

There is mounting evidence that global oil demand will peak between 2020 and 2040, supported by rational economics (inter-fuel competition and efficiency gains) and environmental policies. The perspective of a peak in world oil demand poses a serious economic threat to petrostates whose GDP largely depends on oil export revenues. This article develops a repertoire of five possible strategies that oil-exporting countries can follow in a carbon-constrained world: quota agreements, price wars, efficiency, compensation, and economic diversification. The analysis suggests that the strategic behavior of oil exporters could yield important effects on climate policies, oil prices and related rents, the energy security of importers, and global geopolitics. The findings suggest that models of decarbonization and global energy security need to incorporate more explicitly the strategic behavior of oil exporters.

Keywords: peak oil demand, petrostates, OPEC, climate policy, decarbonization, green paradox

Suggested Citation

Van de Graaf, Thijs and Verbruggen, Aviel, The Oil Endgame: Strategies of Oil Exporters in a Carbon-Constrained World (August 6, 2015). Forthcoming in Environmental Science and Policy. Available at SSRN: https://ssrn.com/abstract=2640488

Thijs Van de Graaf (Contact Author)

Ghent University ( email )

Universiteitstraat 8
Ghent, 9000
Belgium

HOME PAGE: http://www.thijsvandegraaf.be

Aviel Verbruggen

University of Antwerp ( email )

Prinsstraat 13
Antwerp, Antwerp 2000
Belgium

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