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Modelling and analysis of oil import tariff and stockpile policies for coping with supply disruptions

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  • Bai, Y.
  • Zhou, D.Q.
  • Zhou, P.

Abstract

The potential economic damages from oil supply disruptions could be suppressed by emergency preparedness and response measures. As two of the most feasible response measures, oil import tariff and strategic petroleum reserve (SPR) could alleviate short-run oil supply and demand imbalance situations. This study develops a two period model to explore China’s optimal tariff rate and stockpiling size. Our objective is to minimize potential social welfare loss and macroeconomic loss associated with supply disruptions, as well as the policy cost. In a representative numerical case, we find China’s optimal tariff rate is $3.8/bbl and stockpiling size is 219.4million barrels. Higher tariff rate and lower stockpiling size are recommended contrast with current tariff and stockpiling policy. Additionally, by examining the net benefit of policy during a disruption, our result shows that the optimal implementation of tariff–stockpiling policy benefits most rather than single tariff or stockpiling policy does.

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  • 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.
    • Handle: RePEc:eee:appene:v:97:y:2012:i:c:p:84-90
    DOI: 10.1016/j.apenergy.2011.12.036
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    Cited by:

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    5. 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.
    6. Li, Weiqi & Fu, Feng & Ma, Linwei & Liu, Pei & Li, Zheng & Dai, Yaping, 2013. "A process-based model for estimating the well-to-tank cost of gasoline and diesel in China," Applied Energy, Elsevier, vol. 102(C), pages 718-725.
    7. 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.
    8. Bai, Yang & Zhou, Peng & Tian, Lixin & Meng, Fanyi, 2016. "Desirable Strategic Petroleum Reserves policies in response to supply uncertainty: A stochastic analysis," Applied Energy, Elsevier, vol. 162(C), pages 1523-1529.
    9. 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.
    10. Ju, Keyi & Su, Bin & Zhou, Dequn & Wu, Junmin & Liu, Lifan, 2016. "Macroeconomic performance of oil price shocks: Outlier evidence from nineteen major oil-related countries/regions," Energy Economics, Elsevier, vol. 60(C), pages 325-332.
    11. Mei-Mei Xue & Gang Wu & Qian Wang & Yun-Fei Yao & Qiao-Mei Liang, 2019. "Socioeconomic impacts of a shortage in imported oil supply: case of China," 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. 99(3), pages 1415-1430, December.
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    14. 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.
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