Benefits of International Energy Cooperation: a theoretical perspective

Technical Report · Sun Aug 01 04:00:00 EDT 1982

OSTI ID:5432012

Toman, M A

The question addressed is do international agreements, such as IEA agreements, lessen the effects of oil supply disruptions through policy coordination. Specifically, the author shows that coordinated increases in import tariffs or oil stockpiles can increase the well-being of oil consuming countries relative to a situation with no cooperation. (The theory can extend further: coordination among consuming and exporting countries also can be mutually beneficial. Consuming countries can avoid the costs of security measures and exporting countries the adverse consequences of such policies on their oil revenues.) In setting out the formal conditions for gain, the author provides a foundation for further work, now planned at RFF, that will assess the IEA framework through examination of those behavioral elements for which incentives to cheat are greatest. Three important caveats surface in this analysis. First, to achieve significant benefits, cooperation among most of the major importers may be needed; partial coverage may not work. Second, the level of coordination required for optimal outcomes demands substantial policy flexibility among coordinating countries; thus, proposals which look attractive on paper may not be viable in practive. Finally, coordination policies are not costless. While the paper does not address such costs directly, assuring compliance and resolving conflicts among national interests will absorb substantial diplomatic effort and could strain national political structures. Together with an assessment of these costs, then, this paper provides a foundation for a deeper understanding of international institutions such as IEA, a tool for investigating the possible need for changes in institutional arrangements, and a set of guideposts in formulating such arrangements so as to minimize the centrifugal forces that will tend to destroy them when stress occurs. 12 refs.

• Research Organization: Resources for the Future, Inc., Washington, DC (USA)
• DOE Contract Number: AC01-80PE70267
• OSTI ID: 5432012
• Report Number(s): DOE/PE/70267-T33; ON: DE85016763
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
020700 -- Petroleum-- Economics
Industrial
& Business Aspects
29 ENERGY PLANNING, POLICY, AND ECONOMY
290200 -- Energy Planning & Policy-- Economics & Sociology
293000 -- Energy Planning & Policy-- Policy
Legislation
& Regulation
294002* -- Energy Planning & Policy-- Petroleum
COOPERATION
COST BENEFIT ANALYSIS
ENERGY SOURCES
EVALUATION
FOSSIL FUELS
FUELS
IMPORTS
INTERNATIONAL COOPERATION
INTERNATIONAL ENERGY AGENCY
INTERNATIONAL ORGANIZATIONS
OIL-IMPORTING COUNTRIES
PETROLEUM
PLANNING
SUPPLY DISRUPTION
TARIFFS