A Study of the Patterns of Production and Consumption of Crude Oil and Petroleum Products in the Sultanate of Oman

The patterns of production and consumption of crude oil and petroleum products in the Sultanate of Oman over the period of 1970–2000 are studied in this article. A graphical description of the patterns is first presented. Simple and more sophisticated econometric models are then employed to empirically examine the relationships between petroleum-related variables and other macroeconomic variables. The analysis shows many interesting features of the behavior of crude oil and petroleum products in the Sultanate of Oman, including the following: crude oil production remained relatively stagnant until the early 1980s, but started to rise more rapidly since then. The pattern of consumption of petroleum products in the year 2000 showed a very marked difference from the consumption patterns of 1970s. Gasoline consumption grew very rapidly in the Sultanate of Oman, with a high compound annual growth rate of nearly 13%. The consumption of Regular90 variety was relatively stagnant compared to the rapid increase in the consumption of Super97 variety. The vehicular population grew at a high rate of nearly 12% per annum during the last few decades. The empirical econometric analysis has shown that the gross domestic product (GDP) and crude oil prices of the current as well as the previous year have been significant variables influencing crude oil production of any given year. The GDP is strongly related to crude oil exports, total petroleum consumption, and gasoline consumption. However, prices are not highly significant. Crude production is highly correlated to natural gas production.

Keywords:

• Sultanate of Oman
• crude oil
• petroleum products
• historical patterns
• econometric analysis

Notes

¹These percentage shares are calculated in terms of physical units, i.e., fuel oil consumption in number of barrels as a percentage of the total number of barrels consumed. These percentages do not consider the differences in calorific values (i.e., energy contents) of the petroleum products.

²Autocorrelation refers to a situation when, in time-series studies, the value of the dependent variable at time t (i.e., y _t ) is related to its value at previous time periods (i.e., y _t−1, y _t−2, etc.). One of the assumptions of the ordinary least squares method used in statistical regression studies, namely, the value of the error term in any one period is independent from the value in any previous period, is violated because of autocorrelation.