• Story Name: Oil production
  • Story Topics: Economics, Energy,
  • Datafile Name: Oil Production
  • Methods: Scatterplot, Time Series, Transformation,
  • Abstract:

    The increase in annual world crude oil production from 1880 to 1973 follows a pattern of exponential growth. In order to fit a linear model to these data, the oil production variable must be transformed by taking the natural log. A scatterplot of the log of oil production vs. year follows a straight line from 1880 to 1973. Political turmoil in the oil-producing regions of the mideast affected patterns of oil production after 1973.

    A regression of log(oil production) on year shows how closely the exponential growth model fits the data. However, the assumption of independent error terms is violated. A scatterplot of the studentized residuals shows a definite cyclical pattern.

  • Images:
    Oil 1

    Oil 2

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