Strategic oil stocks and public-private interactions: a dynamic game analysis

Technical Report · Sat Sep 01 04:00:00 EDT 1984

OSTI ID:6525114

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

This paper presents an intertemporal numerical strategic oil stockpiling model that explicitly addresses interactions between public and private inventory decisions, rather than focusing on the public inventory decision alone. The model also can be used to examine public and private stockpiling under a wide range of assumptions about disruption risks or demand and supply conditions. Using simplified yet reasonable assumptions, numerical experiments with the model indicate that: (1) unless the disruption severity is high or the crisis is likely to persist, the optimal public stockpile size is significantly smaller than one billion barrels; (2) private inventory speculation is crowded out by public stockpiling in moderate crisis scenarios but not in severe crisis cases; (3) a rapid release policy for the public reserve is optimal unless the crisis is very large or likely to perist; and (4) the imposition of a dynamically optimal oil import tariff has a relatively modest effect on equilibrum stockpile strategies, except in cases of severe or persistent crisis. The modeling technology used in the study also is of interest in its own right. We discuss how this technology may provide a useful tool for analyzing a variety of stochastic dynamic game, particularly games involving an infinite horizon. 28 references, 13 figures, 10 tables.

• Research Organization: Resources for the Future, Inc., Washington, DC (USA)
• DOE Contract Number: AC01-80PE70267
• OSTI ID: 6525114
• Report Number(s): DOE/PE/70267-T4; ON: DE85001581
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
020700* -- Petroleum-- Economics
Industrial
& Business Aspects
29 ENERGY PLANNING, POLICY, AND ECONOMY
290100 -- Energy Planning & Policy-- Energy Analysis & Modeling
294002 -- Energy Planning & Policy-- Petroleum
ENERGY MODELS
ENERGY SOURCES
FOSSIL FUELS
FUELS
INVENTORIES
PETROLEUM
RISK ASSESSMENT
STOCKPILES
SUPPLY AND DEMAND
SUPPLY DISRUPTION