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Global sourcing in oil markets

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  • Farrokhi, Farid

Abstract

This paper develops a multi-country general equilibrium model that incorporates crude oil global sourcing by refineries and refined oil demand by downstream industries that are connected through international trade and input-output linkages. I exploit detailed data on crude oil imports of US refineries, and derive a new procedure that allows for an all-in-one estimation of which suppliers refineries select and how much they buy from each. Using the estimates to evaluate counterfactual policies, I find: (i) A boom in crude oil production of a source changes the relative prices of crude oil across countries modestly which I interpret as the extent to which the behavior of crude oil markets deviates from an integrated global market. (ii) Lifting the ban on U.S. crude oil exports creates notable distributional impact across American crude oil producers and refineries. (iii) Due to the importance of oil trade and consumption, gains from trade are larger compared to the existing benchmarks.

Suggested Citation

  • Farrokhi, Farid, 2020. "Global sourcing in oil markets," Journal of International Economics, Elsevier, vol. 125(C).
    • Handle: RePEc:eee:inecon:v:125:y:2020:i:c:s002219962030043x
    DOI: 10.1016/j.jinteco.2020.103323
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    Cited by:

    1. Nida Cakir Melek & Michael Plante & Mine Yucel, 2021. "Resource Booms and the Macroeconomy: The Case of U.S. Shale Oil," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 42, pages 307-332, October.
    2. Karabay, Bilgehan, 2022. "A new dimension in global value chains: Control vs. delegation in input procurement," Journal of International Economics, Elsevier, vol. 137(C).
    3. Antrà s, Pol & Chor, Davin, 2021. "Global Value Chains," CEPR Discussion Papers 15908, C.E.P.R. Discussion Papers.
    4. Antoine Gervais, 2021. "Global sourcing under uncertainty," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(3), pages 1103-1135, November.
    5. Peter Öhlinger & Michael Irlacher & Jochen Güntner, 2024. "Not all oil types are alike in trade substitution," Nature Communications, Nature, vol. 15(1), pages 1-12, December.
    6. Larch, Mario & Wanner, Joschka, 2024. "The consequences of non-participation in the Paris Agreement," European Economic Review, Elsevier, vol. 163(C).
    7. Gouel, Christophe & Laborde, David, 2021. "The crucial role of domestic and international market-mediated adaptation to climate change," Journal of Environmental Economics and Management, Elsevier, vol. 106(C).
    8. Jochen Güntner & Michael Irlacher & Peter Öhlinger, 2023. "Not all oil types are alike," Economics working papers 2023-11, Department of Economics, Johannes Kepler University Linz, Austria.
    9. Massimo Ferrari Minesso & Maria Sole Pagliari, 2022. "DSGE Nash: solving Nash Games in Macro Models With an application to optimal monetary policy under monopolistic commodity pricing," Working papers 884, Banque de France.
    10. Larch, Mario & Wanner, Joschka, 2024. "The consequences of non-participation in the Paris Agreement," Open Access Publications from Kiel Institute for the World Economy 302105, Kiel Institute for the World Economy (IfW Kiel).
    11. Larch, Mario & Wanner, Joschka, 2024. "The consequences of non-participation in the Paris Agreement," Open Access Publications from Kiel Institute for the World Economy 307097, Kiel Institute for the World Economy (IfW Kiel).
    12. Farid Farrokhi & Heitor S. Pellegrina, 2020. "Global Trade and Margins of Productivity in Agriculture," NBER Working Papers 27350, National Bureau of Economic Research, Inc.
    13. Conteratto, Caroline & Artuzo, Felipe Dalzotto & Benedetti Santos, Omar Inácio & Talamini, Edson, 2021. "Biorefinery: A comprehensive concept for the sociotechnical transition toward bioeconomy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 151(C).

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