Coordinated stock drawdowns: Pros and cons: (Final report)

Technical Report · Mon Jun 09 04:00:00 EDT 1986

OSTI ID:6667005

Weyant, J P

Plans are readied in case a supply disruption reoccurs. There is one significant difference between the oil market today and that of the 1970s. The amount of oil now in government-mandated and government-held stockpiles is large enough to mitigate the sudden price increases and other adverse effects of oil-supply interruptions. Stockpiled oil can be substituted for the lost oil supply and, consequently, provides a direct antidote for the upward pressure on oil prices. This makes oil stockpiles highly credible policy tools. To be effective, it is important for large stock releases to occur as soon after a major oil supply interruption begins as possible. This creates the need for coordination. The fungible nature of oil guarantees that oil released anywhere reduces the effective size of any shortfall, decreasing the price paid for oil everywhere. If one country releases stocks, it reduces the price of oil to all countries buying oil on the world market; if other countries release stocks as well, the price of oil to the first country will be further reduced.

• Research Organization: American Enterprise Inst. for Public Policy Research, Washington, DC; Stanford Univ., CA (USA). Energy Modeling Forum
• DOE Contract Number: FG01-85PE77035
• OSTI ID: 6667005
• Report Number(s): DOE/PE/77035-T4; ON: DE87006212
• Country of Publication: United States
• Language: English

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