Date of Original Version

1980

Type

Article

Published In

The Bell Journal of Economics , Vol. 11, No. 2 (Autumn, 1980), pp. 617-630

Abstract or Description

This article develops and implements a method for evaluating an exhaustible resource (helium) whose rate of production is governed by the rate of production of a second exhaustible resource (natural gas). We determine optimum future price and consumption paths, optimal production rates from various sources, and optimal storage policies for a number of scenarios. We conduct a sensitivity analysis to find which of several possible storage policies performs best for a variety of demand growth rates and discount rates.