Affordable Access

Overreporting Oil Reserves

  • Economics


An increasing number of oil market experts argue that OPEC members substantially overstate their oil reserves. While the economic implications could be dire, the incentives for overreporting remain unclear. This paper analyzes these incentives, showing that oil exporters may overreport to raise expected future supply, thereby discouraging oil-substituting R&D and improving their own future market conditions. In general, however, overreporting is not costless: it must be backed by observable actions and therefore induces losses through supply distortions. Surprisingly, these distortions offset others that arise when suppliers internalize the buyers' motives for R&D. In this case, overreporting is rational, credible, and cheap.

There are no comments yet on this publication. Be the first to share your thoughts.


Seen <100 times

More articles like this

Mexican oil reserves.

on Science Feb 16, 1979

Mexican oil reserves.

on Science Feb 16, 1979

The impact of the motor car on oil reserves

on Energy Policy Jan 01, 1973
More articles like this..