The issues considered in this paper arise from the belief that petroleum production really will decline before long, so that the rapidly growing global demands will begin to be met by alternative technologies. The first step is to review recent estimates of the elasticity of demand for petrol and put the most likely value into a reasonable theoretical model, taking generalised account of alternative propulsion technologies.. The second step is to project the model forward into a period of higher petroleum prices. Whereas the initial model is based on fairly good estimates, the future model is highly speculative. Thinking has been coloured by the fact that travel is not generally a form of final consumption but merely a facilitator of both productive and consumption activity. This has led to widespread acceptance of previous estimates indicating that petrol demand is very inelastic. Now, there are estimates indicating much more elastic demands. The notion of crisis is sometimes accentuated by the assumption that demand is extremely inelastic and will remain so. (Author/publisher) For the covering entry of this conference, please see ITRD abstract no. E210528.
Samenvatting