Implications of macroeconomic disruption costs and public-private interactions for strategic oil stockpiling

Technical Report · Tue Jan 01 04:00:00 EST 1985

OSTI ID:5319198

Murphy, F H; Toman, M A; Weiss, H J

In this paper we present a unified treatment of public-private interactions in oil stockpiling with oil import tariffs which takes into account both the balance-of-payments cost and macroeconomic dislocations from oil supply disruptions. The analysis is based on a stochastic, dynamic, nonlinear simulation model that computes ''intertemporally credible'' Nash equilibria for the public-private stockpile game under a variety of input assumptions. Two key policy implications of the study are: (1) with no tariff policy, the United States should be prepared to rapidly draw down the SPR even in a fairly moderate crisis, despite the resulting ''crowding out'' of private stocks; (2) however, there are significant social gains from imposing a tariff of around $10/bbl under nondisrupted market conditions (with the tariff to be scaled back or eliminated in a crisis), together with a more conservative strategy for drawing down the SPR. In addition to shedding light on these policy issues, the paper illustrates a methodology which may be useful for analyzing a number of other dynamic games. 28 refs., 6 figs., 12 tabs.

• Research Organization: Resources for the Future, Inc., Washington, DC (USA)
• DOE Contract Number: AC01-80PE70267
• OSTI ID: 5319198
• Report Number(s): DOE/PE/70267-T28; ON: DE85016784
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
024000 -- Petroleum-- Storage-- (-1989)
29 ENERGY PLANNING, POLICY, AND ECONOMY
290200 -- Energy Planning & Policy-- Economics & Sociology
294002* -- Energy Planning & Policy-- Petroleum
ECONOMIC IMPACT
ENERGY SOURCES
FOSSIL FUELS
FUELS
GOVERNMENT POLICIES
MATHEMATICAL MODELS
PETROLEUM
PLANNING
RESERVES
RESOURCES
SIMULATION
STOCKPILES
STRATEGIC PETROLEUM RESERVE
SUPPLY DISRUPTION
TARIFFS