Next year's expected price of oil is $88 per barrel and the interest rate is 10 per cent per year. According to the Hotelling Principle, the price of oil this year is

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The Hotelling Principle suggests that the price of a non-renewable resource, like oil, should increase at the rate of interest. If next year's expected price is $88 and the interest rate is 10%, this year's price would be $88 / (1 + 0.10) = $80 per barrel.

Next Year's Expected Price of Oil Is $88 Per Barrel