An Examination of Exhaustible Resource Pricing

Contrary to the predictions of economic theory, prices ofimportant exhaustible resources have not appreciated in real terms during the past century. Possible explanations for the lack of a trend in prices, such as changes in demand, discoveries of new reserves, and technological change are explored in this article. Based on the evidence, it appears that theoretical models consistently have under-estimated the price elasticity ofsupply ofand demand for exhaustible resources. Despite increasing consumption, resource availability has increased as well, suggesting that pressure for rising real resource prices will continue to be suppressed. Economist, Federal Reserve Bank of San Francisco. The author would like to thank Steve Dean for his excellent assistance. Editorial committee members were Michae