Chaton, Corinne and Creti, Anna and Villeneuve, Bertrand (2008): Storage and Security of Supply in the Medium Run.
Download (282kB) | Preview
This paper analyzes the role of private storage in a market for a commodity (e.g. natural gas) whose supply is subject to the threat of an irreversible disruption. We focus on the medium term in which seasonality of demand and exhaustibility can be neglected. We characterize the price and inventory dynamics (accumulation, drainage and limit stocks) in a competitive equilibrium with rational expectations. We show the robustness of our results to alternative scenarios in which either a disruption has finite duration or the crisis is foreseen. During the crisis consumers may put pressure on the Government to intervene, but too severe antispeculative measures would inefficiently discourage storage. Practical solutions to this dilemma cause welfare losses that we characterize and quantify.
|Item Type:||MPRA Paper|
|Original Title:||Storage and Security of Supply in the Medium Run|
|Keywords:||Storage; Dynamic models; Gas industry|
|Subjects:||L - Industrial Organization > L9 - Industry Studies: Transportation and Utilities > L95 - Gas Utilities ; Pipelines ; Water Utilities
Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q48 - Government Policy
L - Industrial Organization > L9 - Industry Studies: Transportation and Utilities > L98 - Government Policy
|Depositing User:||Bertrand Villeneuve|
|Date Deposited:||07. Dec 2008 15:27|
|Last Modified:||22. Feb 2013 05:55|
Bergstrom, Clas, Glenn C. Loury and Mats Persson (1985), “Embargo Threats and the Management of Emergency Reserves,” Journal of Political Economy, 93(1), 26-42.
Creti, Anna and Bertrand Villeneuve (2008), “Equilibrium Storage in a Markov Economy.”
Crawford, Vincent, Paul Joel Sobel and Ichiro Takahashi (1984), “Bargaining, Strategic Reserves, and International Trade in Exhaustible Resources,” American Journal of Agricultural Economics, 66(4), 472-80.
Devarajan, Shantayanan and Robert J. Weiner (1989), “Dynamic Policy Coordination: Stockpiling for Energy Security,” Journal of Environmental Economics and Management, 16(1), 9-22.
DG TREN (2006), Statistical pocketbook, Brussels.
DTI (2006), “The Energy Challenge,” London.
DTI (2007), “Energy Market Outlook,” London.
JESS (2006), “Long-Term Security of Energy Supply,” Report to DTI, London.
Grossman, Gene and Elhanan Helpman (1994), “Protection for sale,” American Economic Review, 84, 833-850.
Hillman, Arye L. and Ngo Van Long (1983), “Pricing and Depletion of an Exhaustible Resource when There is Anticipation of Trade Disruption,” Quarterly Journal of Economics, 98(2), 215-233.
Hogan, William (1983), “Oil Stockpiling: Help Thy Neighbor,”Energy Journal, 4(3), 49-71.
Hughes Hallett, A.J. (1984), “Optimal Stockpiling in a High-Risk Commodity Market: The Case of Copper,”Journal of Economic Dynamics and Control, 8(2), 211-238.
ILEX (2006), “Strategic Storage and Other Options to Ensure Long-Term Security of Supply,” Report to DTI, London. International Energy Agency (2003), World Energy Investment Outlook, Paris.
Mulder, Machiel and Gijsbert Zwart (2006), “Market Failures and Government Policies in Gas Markets,” CPB Memoranda 143, CPB Netherlands Bureau for Economic Policy Analysis.
Nichols, Albert and Richard Zeckhauser (1977), “Stockpiling Strategies and Cartel Prices,” Bell Journal of Economics, 8(1), 66-96.
Oxera (2007), “An Assessment of Potential Measure to Improve Gas security of Supply,” Report to DTI, London. Stern, Jonathan (2004), “UK Gas Security: Time to get Serious,” Energy Policy, 32(17), 1967-1979.
Stiglitz, Joseph (1977), “An Economic Analysis of the Conservation of Depletable Natural Resources,” Draft Report, IEA, Section III.
Sweeney, John (1977), “Economics of Depletable Resources: Market Forces and Intertemporal Bias,” Review of Economic Studies, 44, 125-142.
Teisberg, Thomas J. (1981), “A Dynamic Programming Model of the U.S. Strategic Petroleum Reserve,” Bell Journal of Economics, 12 (2), 526-546.
Weisser, Hellmuth (2007), “The security of gas supply—a critical issue for Europe?,” Energy Policy, 35(1), 1-5. Wilman, John D. and George S. Tolley (1977), “The Foreign Dependence Question,” Journal of Political Economy, 85(2), 323-347.
Williams, Jeffrey C. and Brian D. Wright (1991): Storage and Commodity Markets, Cambridge University Press.
Wright, Brian D. and Jeffrey C. Williams (1982), “The Roles of Public and Private Storage in Managing Oil Import Disruptions,” Bell Journal of Economics, 13, 341-353.