A long-term view of worldwide fossil fuel prices

Shahriar Shafiee, Erkan Topal

Research output: Contribution to journalArticle

63 Citations (Scopus)

Abstract

This paper reviews a long-term trend of worldwide fossil fuel prices in the future by introducing a new method to forecast oil, natural gas and coal prices. The first section of this study analyses the global fossil fuel market and the historical trend of real and nominal fossil fuel prices from 1950 to 2008. Historical fossil fuel price analysis shows that coal prices are decreasing, while natural gas prices are increasing. The second section reviews previously available price modelling techniques and proposes a new comprehensive version of the long-term trend reverting jump and dip diffusion model. The third section uses the new model to forecast fossil fuel prices in nominal and real terms from 2009 to 2018. The new model follows the extrapolation of the historical sinusoidal trend of nominal and real fossil fuel prices. The historical trends show an increase in nominal/real oil and natural gas prices plus nominal coal prices, as well as a decrease in real coal prices. Furthermore, the new model forecasts that oil, natural gas and coal will stay in jump for the next couple of years and after that they will revert back to the long-term trend until 2018.

Original languageEnglish
Pages (from-to)988-1000
Number of pages13
JournalApplied Energy
Volume87
Issue number3
DOIs
Publication statusPublished - Mar 2010

Keywords

  • Forecasting non-renewable energy price
  • Historical fossil fuel prices
  • Jump and dip diffusion
  • Long-term trend reverting

ASJC Scopus subject areas

  • Building and Construction
  • Energy(all)
  • Mechanical Engineering
  • Management, Monitoring, Policy and Law

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