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A methodological approach to strategic petroleum reserves

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  • Samouilidis, JE
  • Berahas, SA

Abstract

Energy constitutes a small fraction of the production inputs in the economy, yet the rigidity imposed by the short and medium term inability to substitute energy with other production factors in case of an energy shortage, requires the establishment of safeguard mechanisms to ensure sufficient energy supply during an emergency. These safeguards usually take the form of strategic energy reserves. A methodological approach is presented here, relating the level of strategic petroleum reserves, the decision variable, with the costs associated with their storage and the economic losses incurred by an energy shortage. This approach is based on the use of a decision tree, to portray emergency scenarios. Each scenario, a branch of the decision tree, can be evaluated in terms of a cost function which includes the inventory procurement and maintenance cost and the shortage cost inflicted by a petroleum shortfall.

Suggested Citation

  • Samouilidis, JE & Berahas, SA, 1982. "A methodological approach to strategic petroleum reserves," Omega, Elsevier, vol. 10(5), pages 565-574.
    • Handle: RePEc:eee:jomega:v:10:y:1982:i:5:p:565-574
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    Cited by:

    1. Huanan Li & Xin Chen, 2016. "Dynamic game analysis on China’s public and private oil stockpiles," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 84(1), pages 715-723, October.
    2. Zhang, Xiao-Bing & Fan, Ying & Wei, Yi-Ming, 2009. "A model based on stochastic dynamic programming for determining China's optimal strategic petroleum reserve policy," Energy Policy, Elsevier, vol. 37(11), pages 4397-4406, November.
    3. Wu, Gang & Fan, Ying & Liu, Lan-Cui & Wei, Yi-Ming, 2008. "An empirical analysis of the dynamic programming model of stockpile acquisition strategies for China's strategic petroleum reserve," Energy Policy, Elsevier, vol. 36(4), pages 1470-1478, April.
    4. Wei, Yi-Ming & Wu, Gang & Fan, Ying & Liu, Lan-Cui, 2008. "Empirical analysis of optimal strategic petroleum reserve in China," Energy Economics, Elsevier, vol. 30(2), pages 290-302, March.
    5. Bai, Y. & Zhou, D.Q. & Zhou, P., 2012. "Modelling and analysis of oil import tariff and stockpile policies for coping with supply disruptions," Applied Energy, Elsevier, vol. 97(C), pages 84-90.
    6. Bai, Y. & Zhou, D.Q. & Zhou, P. & Zhang, L.B., 2012. "Optimal path for China's strategic petroleum reserve: A dynamic programming analysis," Energy Economics, Elsevier, vol. 34(4), pages 1058-1063.
    7. Zhang, Xiao-Bing & Zheng, Xinye & Qin, Ping & Xie, Lunyu, 2018. "Oil import tariff game for energy security: The case of China and India," Energy Economics, Elsevier, vol. 72(C), pages 255-262.
    8. Zhang, Xiao-Bing & Qin, Ping & Chen, Xiaolan, 2017. "Strategic oil stockpiling for energy security: The case of China and India," Energy Economics, Elsevier, vol. 61(C), pages 253-260.
    9. Xie, Nan & Yan, Zhijun & Zhou, Yi & Huang, Wenjun, 2017. "China's optimal stockpiling policies in the context of new oil price trend," Energy Policy, Elsevier, vol. 105(C), pages 332-340.
    10. Jiao, Jian-Ling & Han, Kuang-Yi & Wu, Gang & Li, Lan-Lan & Wei, Yi-Ming, 2014. "The effect of an SPR on the oil price in China: A system dynamics approach," Applied Energy, Elsevier, vol. 133(C), pages 363-373.
    11. Wu, Gang & Wei, Yi-Ming & Nielsen, Chris & Lu, Xi & McElroy, Michael B., 2012. "A dynamic programming model of China's strategic petroleum reserve: General strategy and the effect of emergencies," Energy Economics, Elsevier, vol. 34(4), pages 1234-1243.
    12. Zhang, Xiao-Bing, 2014. "Optimal strategic oil stockpiling and import tariffs: The case of China," Energy Economics, Elsevier, vol. 45(C), pages 463-474.
    13. Fan, Ying & Zhang, Xiao-Bing, 2010. "Modelling the strategic petroleum reserves of China and India by a stochastic dynamic game," Journal of Policy Modeling, Elsevier, vol. 32(4), pages 505-519, July.
    14. Bai, Y. & Dahl, C.A. & Zhou, D.Q. & Zhou, P., 2014. "Stockpile strategy for China׳s emergency oil reserve: A dynamic programming approach," Energy Policy, Elsevier, vol. 73(C), pages 12-20.

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