Hotelling's Theory

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Dictionary Says

Definition of 'Hotelling's Theory'

This theory proposes that owners of non-renewable resources will only produce a supply of their product if it will yield more than instruments available to them in the markets - specifically bonds and other interest-bearing securities. This theory assumes that markets are efficient and that the owners of the non-renewable resources are motivated by profit. Hotelling's theory is used by economists to attempt to predict the price of oil and other nonrenewable resources, based on prevailing interest rates.   
Investopedia Says

Investopedia explains 'Hotelling's Theory'

The theory states that if oil prices do not rise at the prevailing interest rate, there would be no restrictions on supply. If, conversely, oil prices were expected to increase faster than interest rates, producers would be better off not bringing the oil out of the ground.
Search results for

'Hotelling's Theory'

  • Oil As An Asset: Hotelling's Theory On Price

    http://www.investopedia.com/articles/financial-theory/08/hotelling-theory-price-oil.asp
    Oil As An Asset: Hotelling's Theory On Price. ... Criticisms Although Hotelling's theory
    has many followers, it has generally failed to hold up historically. ...

  • Not All Eagle Ford Shale Is Created Equal

    http://stocks.investopedia.com/stock-analysis/2010/Not-All-Eagle-Ford-Shale-Is-Created-Equal-PXD-HK-ROSE-EP0202.aspx
    ... Oil As An Asset: Hotelling's Theory On Price.) Use the Investopedia Stock Simulator
    to trade the stocks mentioned in this stock analysis, risk free! ...

  • Haynesville Shale Development To Decline In 2012

    http://stocks.investopedia.com/stock-analysis/2011/Haynesville-Shale-Development-To-Decline-In-2012-XCO-FST-QEP-SM1124.aspx
    ... (For more, read Oil As An Asset: Hotelling's Theory On Price.) Use the Investopedia
    Stock Simulator to trade the stocks mentioned in this stock analysis, risk ...

  • A Primer On Offshore Drilling

    http://www.investopedia.com/articles/fundamental-analysis/10/a-primer-on-offshore-drilling.asp
    ... This theory provides some insight; see Oil As An Asset: Hotelling's Theory On
    Price.) Overcapacity is a common risk in the industry, as well. ...

  • 10 Countries With The Cheapest Gas At The Pump - Investopedia.com

    http://financialedge.investopedia.com/financial-edge/1011/10-Countries-With-The-Cheapest-Gas-At-The-Pump.aspx
    ... After all, gas may be cheap but oil supply is quite limited. (To learn more
    about oil, see Oil As An Asset: Hotelling's Theory On Price.). ...

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