An Economic Analysis of Petroleum and Military Security in the Persian Gulf.
Chapman, Duane; Khanna, Neha
Geologic estimates ofremainingglobalpetroleum resourcesplace about 50% in the Persian Gulf. Production costs are estimated at $5 per barrel there, and $15 per barrel in the North Sea andAlaska. Using mathematical methods derivedfrom depletion theory, the present valueofeconomicrentfromoilisontheorder of$20trillion. Gametheoryisutilizedtoexplain the $15-$20 per barrel price band that eXistedfrom 1986 to 1999; new economicforces may displace this stable pattern. International trade in petroleum and conventional weapons are analyzedwitheconometricmethods; theoccurrence ofnuclearweaponscapabilityisexplored
Charles H. Dyson School of Applied Economics and Management, Cornell University