A Metamodel of the Oil Game under Climate Treaties

A climate treaty like the one which should replace the Kyoto Protocol after 2012, may have important impacts on the oil, gas and coal markets. The full impact of such a treaty will not be felt before 2030. In this paper one uses a computable general equilibrium model as a simulator of the world economy to obtain a description of the demand laws for oil, gas and coal in a period centered in 2030. One then uses a hierarchical game à la Stackelberg where OPEC is a price fixing leader and a competitive fringe replies competitively according to a supply-demand equilibrium for the three competitive energy forms, oil, gas and coal. This permits one to assess the possible power of OPEC to counteract the effect of a world tax on carbon content. One shows the possible effect on oil price, OPEC wealth or market share, and global emissions reduction achieved for different tax levels.