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March 25, 2010

Title: An Energy-economic Oil Production Model

Abstract: In this talk, an energy-economic model for global oil production is presented, based on a constant elasticity of substitution (CES) production function that includes labour, capital and oil consumption as input variables. In combination with a relation between oil supply on one side, and capital and remaining oil reserves on the other side, a system of differential-algebraic equations is derived whose solution contains oil production, referred to as Hubbert curves, as well as the price of oil. The equations are solved numerically with several methods, as well as analytically for one particular case. The graphs break the symmetry of the common bell-shaped Hubbert curves and predict a much steeper decline past peak oil production. This supports increasing evidence that large decline rates might indeed materialize for global oil supply.