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Optimal strategic oil stockpiling and import tariffs: The case of China

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  • Zhang, Xiao-Bing

Abstract

As two of the most important instruments for dealing with the issues of energy supply security, strategic petroleum reserves (SPRs) and oil import tariffs have been proven effective in developed countries. While China is currently building up its strategic oil reserves to ensure energy security, it is of great importance to investigate China's optimal oil stockpiling policies while taking into account the possibility of imposing an import tariff or quota, which can also be used for alleviating the energy insecurity of an oil-importing country. Employing a dynamic programming framework, this paper examines the optimal SPR policies and oil import tariffs or quotas for China and the interactions between the two instruments under different scenarios for the world oil market. The results show that the combination of optimal tariffs and SPR policies can substantially reduce the expected oil insecurity cost for China; the effect is larger when the probability that a disruption will continue is higher.

Suggested Citation

  • Zhang, Xiao-Bing, 2014. "Optimal strategic oil stockpiling and import tariffs: The case of China," Energy Economics, Elsevier, vol. 45(C), pages 463-474.
  • Handle: RePEc:eee:eneeco:v:45:y:2014:i:c:p:463-474
    DOI: 10.1016/j.eneco.2014.08.012
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. 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.

    More about this item

    Keywords

    Strategic petroleum reserve; Oil import tariff; Energy security; Dynamic programming;

    JEL classification:

    • P48 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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