Application Of Hotelling Rule For Analysing Utilisation Pattern Of Non-Renewable Resources In India Through ONGC

Scientific Essay from the year 2009 in the subject Business economics - Economic Policy, Adani Institute of Infrastructure Management (Technology Innovation & Management for Sustainable Development (TIMS 2009)), course: Non Renewable Resources, language: English, abstract: Hotteling Rule was evolved by Harold Hotteling as a result of analysis of non-renewable resource management, is a distinct theory which gives us clear idea of non renewable resource economics and provides a close insight into long run behaviour of price and supply in market for non renewable resources.

The paper deals with the application of Hotteling rule to Oil and Natural Gas Corporation (ONGC) to find the sustainability of the oil resources and analyse the reserve trend scenarios. ONGC is the only fully¿integrated petroleum company in India, operating along the entire hydrocarbon value chain. It also contributes to over 78% of Indiäs oil and gas production. The analysis was carried out taking 2000-01 as the base year till 2007-08 to find out the sustainability of the oil reserves of ONGC.

It is found that according to the baseline scenario, the resources would deplete in 3-4 years, but as every year new reserves are found, the resource is being sustainable since 2000. Thus Hotteling Rule is said to be indifferent for the firm and the firm is said to sustainable.

The paper also carries the assessment of the exhaustion rate of oil and natural gas in India considering 1990 as the base year. The exhaustion rate of the reserves is found to be 13 to 21 years until and unless there is a new reserve replacement.