A comparison of assumptions used in models of the world oil market

Using the results of ten models participating in the World Oil Study and a simple recursive simulation model, this paper discusses the implications of alternative assumptions that can be used in constructing a model of the world oil market. Conclusions are that the choice of recursive simulation or intertemporal optimization model influences types of behavior and major trends in the outputs; that the inclusion of energy-economy feedback is significant in moderating the magnitude of price changes; and that alternative assumptions about the price responsiveness of non-OPEC oil production have a major impact on the projected prices. Some fruitful areas for further modeling research are suggested.