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The importance of weighted variables to OPEC's production quota allocation

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  • Mahmoud Al‐Osaimy
  • Aziz Yahyai

Abstract

The objective of this paper is to estimate a weighted variables formula that could be used to calculate OPEC quota distribution. Instead of assigning an arbitrary weight to each of the selected variables included in the formula, we estimate weights based on historical data, using regression analysis. Six national characteristics of OPEC Member Countries, related to oil and socio‐economic factors, are considered in the estimation. Time‐series are used from 1982 to 2001, for each OPEC Member Country. The results show that the estimated weights are sensitive to the periods considered in the analysis, as well as the number of variables selected. However, there is no specific optimum way of dealing with the sensitive, complex quota issue.

Suggested Citation

  • Mahmoud Al‐Osaimy & Aziz Yahyai, 2003. "The importance of weighted variables to OPEC's production quota allocation," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 27(2), pages 129-141, June.
    • Handle: RePEc:bla:opecrv:v:27:y:2003:i:2:p:129-141
    DOI: 10.1111/1468-0076.t01-1-00056
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    References listed on IDEAS

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    1. Gault, John & Spierer, Charles & Bertholet, Jean-Luc & Karbassioun, Bahman, 1999. "How does OPEC allocate quotas?," Journal of Energy Finance & Development, Elsevier, vol. 4(2), pages 137-148.
    2. Ahmad Saleh Alsalem & Subhash C. Sharma & Marvin D. Troutt, 1997. "Fairness Measures and Importance Weights for Allocating Quotas to OPEC Member Countries," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 1-21.
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