Abstract
A full appreciation of individual South-East Asian national policies on petroleum resources—that is, policies for obtaining a supply of petroleum reserves—is not possible without understanding the total energy picture in each country. An analysis of the demand for and supply of such reserves requires some explanation of the market in which this resource is traded. The individual characteristics of the resource bases, as well as the patterns of energy consumption, are normally evaluated by policy-makers in terms of each country’s socio-economic goals to determine the direction of resource development policies. Thus, a study of the variables that influence exploration for petroleum must begin with a background discussion on the resource potentials of petroleum and of competing energy goods, as well as the demand patterns for these energy forms.1
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The term `petroleum’ will be used to refer to both oil and gas in this study, inasmuch as the exploration for petroleum may discover oil or gas, or both.
The distinction between `reserves’ and `resources’ is explained in Chapter II.
The term `state’ will be used in this study to refer to the central government in any country, regardless of the specific manner in which the political subdivisions of a country are organized in relation to that centre.
The term `optimal’ is used to refer to the best value that a variable can take with reference to some particular objective.
The term `property rights’ refers to sanctioned behavioural relations among men that arise from the existence and use of economic goods. The relations specify norms of behaviour and the cost of non-observance. See E. G. Furubotn and S. Pejovich, The Economics of Property Rights (Cambridge, Mass.: Ballinger, 1974).
See K. J. Cohen and R. M. Cyert, Theory of the Firm, 2nd ed. ( New Delhi: Prentice-Hall, 1974 ), p. 20.
The traditional theory of the firm continuously receives serious criticisms because some of its underlying assumptions fail to correspond with observable or existing institutional structures or conditions. As recently put by Gordon: ‘First, the mainstream of economic theory sacrifices far too much relevance in its insistent pursuit of ever increasing rigor. And, second, we economists pay too little attention to the changing institutional environment that conditions behaviour.’ See Robert A. Gordon, `Rigor and Relevance in a Changing Institutional Setting’ (Presidential address delivered at the 88th meeting of the American Economic Association, Dallas, Texas, 29 December 1975), American Economic Review, Vol. 66 (March 1976), p. 1.
See E. Furobotn and S. Pejovich, `Property Rights and Economic Theory: A Survey of Recent Literature’, Journal of Economic Literature, Vol. 10 (1972), pp. 1137–62.
In the neoclassical economic model, also sometimes referred to as the certainty model,the firm is assumed to have perfect information about its alternative courses and future events, and can relate a unique outcome to each alternative. Hence, the concept of maximization implies, among other things, that the entrepreneur can choose between several sizes of profits. He knows what his costs are, what his revenues will be, and then makes his decision. Critics have raised questions about the effects of risks and uncertainty on the behaviour of The firm. (See, for example, Frank H. Knight’s Risk, Uncertainty and Profit (Boston: Houghton Mifflin, 1921) and the Simon-Theil theorem on certainty equivalence in H. A. Simon, `Dynamic Programming under Uncertainty with a Quadratic Criterion Function’, Econometrica,Vol. 24 (1956), pp. 74–81, and H. Theil, `A Note on Certainty Equivalence in Dynamic Planning’, Econometrica,Vol. 25 (1957), pp. 346–9.) In the absence of perfect information about future events, the firm faces multiple possible outcomes and has a decision problem more difficult than what it faces under the certainty model. As Nordquist points out, however, rationality does not require that a choice is made under conditions where all alternatives and all outcomes are known. (See G. L. Nordquist, `The Breakup of the Maximization Principle’, Quarterly Review of Economics and Business,Vol. 5 (Fall 1965), pp. 33–46.) If a decision-maker perceives a set of contemporaneous alternatives, and he is able to rank these in a consistent preference ordering, rationality suggests that he proceeds to choose (maximize) from among that subset of available alternatives that which is most preferred. Rational behaviour thus implies the existence of some maximization procedure, regardless of the state of knowledge underlying the decision.
South-East Asia is defined in the conventional sense and covers the following countries: Brunei, Burma, Cambodia (Kampuchea, also previously known as the Khmer Republic), Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.
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© 1980 Oxford University Press
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Siddayao, C.M. (1980). Petroleum and Other Energy Forms: Resource Base and Utilization Rates in South-East Asia. In: The Supply of Petroleum Reserves in South-East Asia. Natural Resources of South-East Asia. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-6852-6_2
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DOI: https://doi.org/10.1007/978-94-011-6852-6_2
Publisher Name: Springer, Dordrecht
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