NONLINEAR DYNAMIC SIMULATION OF OPTIMAL DEPLETION OF CRUDE-OIL IN THELOWER 48 UNITED-STATES

In this study, we combine the economic theory of optimal resource use with econometric estimates of demand and supply parameters to develop a nonlinear dynamic model of crude oil exploration, development, and p roduction in the lower 48 United States. The model is simulated with t he graphical programming language STELLA. We simulate optimal time pat hs for crude oil depletion for the years 1985 to 2020. We emphasize th e relevance of paramater adjustments for the computer simulation in re sponse to uncertainty in the parameter values. The procedure presented in this study encourages use of economic theory and econometrics in c ombination with nonlinear dynamic simulation to enhance our understand ing of complex interactions present in models of optimal resource use.