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Energy security Coping with multiple supply risks


Zweifel, Peter; Bonomo, Susanne (1995). Energy security Coping with multiple supply risks. Energy Economics, 17(3):179-183.

Abstract

This study starts from the observation that today's Western trading nations are exposed to multiple risks of energy supplies, eg simultaneous shortage of oil and gas supplies. To cope with these risks, both oil and gas can be stockpiled. Adopting the viewpoint of a policy maker who aims at minimizing the expected cost of security of supply, optimal simultaneous adjustments of oil and gas stocks to exogenous changes such as an increase in the probability of supply disruption are derived. Against this benchmark, one-dimensional rules such as ‘oil reserves for 90 days’ turn out to be not only suboptimal but also to suggest adjustments exacerbating suboptimality.

Abstract

This study starts from the observation that today's Western trading nations are exposed to multiple risks of energy supplies, eg simultaneous shortage of oil and gas supplies. To cope with these risks, both oil and gas can be stockpiled. Adopting the viewpoint of a policy maker who aims at minimizing the expected cost of security of supply, optimal simultaneous adjustments of oil and gas stocks to exogenous changes such as an increase in the probability of supply disruption are derived. Against this benchmark, one-dimensional rules such as ‘oil reserves for 90 days’ turn out to be not only suboptimal but also to suggest adjustments exacerbating suboptimality.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Language:English
Date:1995
Deposited On:11 Feb 2008 12:21
Last Modified:20 Feb 2018 11:52
Publisher:Elsevier
ISSN:0140-9883
OA Status:Closed
Publisher DOI:https://doi.org/10.1016/0140-9883(95)00018-P

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