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Risk aversion and the insurance value of strategic oil stockpiling

Technical Report ·
OSTI ID:6384622
;
In this paper we estimate the value of strategic oil stockpiling in reducing the welfare cost of the US economy of income risks induced by fluctuating oil prices. The estimates, derived by combining quarterly data with a Taylor series approximation of the stockpile premium, range from $.30/bbl to $3.00/bbl depending on the assumptions made about risk preferences and other influences. However, the lower range of the estimates - under $1.00/bbl - probably is closer to the true value. Thus, the estimates suggest little need for adjusting benefit-cost analyses of optimal government stockpiling to reflect attitudes toward risk. 37 references, 1 table.
Research Organization:
Resources for the Future, Inc., Washington, DC (USA)
DOE Contract Number:
AC01-80PE70267
OSTI ID:
6384622
Report Number(s):
DOE/PE/70267-T6; ON: DE85001579
Country of Publication:
United States
Language:
English

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Related Subjects

02 PETROLEUM
020700* -- Petroleum-- Economics
Industrial
& Business Aspects
29 ENERGY PLANNING, POLICY, AND ECONOMY
290200 -- Energy Planning & Policy-- Economics & Sociology
294002 -- Energy Planning & Policy-- Petroleum
ENERGY SOURCES
FOSSIL FUELS
FUELS
INCOME
INSURANCE
PETROLEUM
PRICES
RISK ASSESSMENT
STOCKPILES
SUPPLY DISRUPTION