Hotelling's Rule is helpful in determining the price of oil
While Hotelling's Rule is traditionally used in some economic models and price forecasting frameworks for non-renewable resources, extensive empirical research frequently challenges its validity, showing that real-world oil and mineral prices often fail to follow its theoretical trajectory.
The retrieved literature shows a division regarding Hotelling's Rule. While papers like [4] and [8] utilize it as a baseline or conceptual model for economic and price evaluations of oil, comprehensive reviews and empirical tests (such as [1], [2], and [5]) consistently find that the rule lacks empirical validity and fails to accurately describe real-world extraction paths and price dynamics for non-renewable resources like oil and gold. Therefore, the balance of evidence is contested, leaning toward the limitations of the rule in practical application.
The evidence we hold leans leans refuted
How this was weighed
official record 3x · fact-check 2x · hedged 1x · crowd & reference 1x
- A review on application of nanoparticles for EOR purposes: h · peer-reviewed · supports · weight 1.3 · 2023
- Harnessing Big Data for Price Predictions in Oil and Gas Mar · peer-reviewed · supports · weight 1.05 · 2024
- Whither Hotelling: Tests of the Theory of Exhaustible Resour · peer-reviewed · refutes · weight 1.6 · 2009
- The Hotelling rule in non‐renewable resource economics: A re · peer-reviewed · refutes · weight 1.3 · 2020
- Non-Renewable Resources and Sustainable Resource Extraction: · peer-reviewed · refutes · weight 1.05 · 2022
Iravani M, Khalilnezhad Z, Khalilnezhad A. A review on application of nanoparticles for EOR purposes: history and current challenges.. 2023. https://doi.org/10.1007/s13202-022-01606-x
This study incorporates the Hotelling method as an appropriate economic model for evaluating the enhanced oil recovery (EOR) process.
Margaret E. Slade, Henry Thille. Whither Hotelling: Tests of the Theory of Exhaustible Resources. 2009. https://doi.org/10.1146/annurev.resource.050708.144223
The review of the empirical literature on the Hotelling model highlights that real-world tests frequently fail to match theoretical predictions.
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Manan Agrawal, Om Nagpurey, Kanchan M. Dhote. Harnessing Big Data for Price Predictions in Oil and Gas Markets. 2024. https://doi.org/10.1109/ICMACC62921.2024.10894164
The research utilizes the theory of exhaustible resources as a pivotal forecast theory for modeling and predicting future prices of oil and gas resources.
Roberto Ferreira da Cunha, Antoine Missemer. The Hotelling rule in non‐renewable resource economics: A reassessment. 2020. https://doi.org/10.1111/caje.12444
This reassessment notes that empirical tests conclude the Hotelling rule lacks validity and requires strong amendments to describe long-term behavior.
Courage Mlambo. Non-Renewable Resources and Sustainable Resource Extraction: An Empirical Test of the Hotelling Rule’s Significance to Gold Extraction in South Africa. 2022. https://doi.org/10.3390/su141710619
An empirical test on non-renewable resource extraction found no significant relationship between interest rates and prices, indicating the rule does not hold.
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