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Energy security policies in EU-25--The expected cost of oil supply disruptions

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  • Hedenus, Fredrik
  • Azar, Christian
  • Johansson, Daniel J.A.

Abstract

A framework for analyzing the impact on the expected cost of oil disruption by energy policies in EU-25 is developed. The framework takes into account how energy policies affect the oil market, the expected oil price increase, and the disruption costs. OPEC's strategic behavior is modelled as a dominant firm, and the model includes price interdependence between different energy commodities to better estimate the cost of an oil disruption. It is found that substituting pellets for oil in households and using imported sugar cane ethanol are cost-efficient policies if greenhouse gas benefits are included. Domestically produced wheat ethanol is not found to be cost-efficient even if both the expected cost of oil disruption and greenhouse gas benefits are included, the same also holds for hybrid vehicles. The gross expected economic gain of the policies is found to be between 9 and 22Â [euro]/bbl oil replaced.

Suggested Citation

  • Hedenus, Fredrik & Azar, Christian & Johansson, Daniel J.A., 2010. "Energy security policies in EU-25--The expected cost of oil supply disruptions," Energy Policy, Elsevier, vol. 38(3), pages 1241-1250, March.
  • Handle: RePEc:eee:enepol:v:38:y:2010:i:3:p:1241-1250
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    References listed on IDEAS

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    1. Johansson, Bengt, 2013. "Security aspects of future renewable energy systems–A short overview," Energy, Elsevier, vol. 61(C), pages 598-605.
    2. repec:eee:energy:v:130:y:2017:i:c:p:144-154 is not listed on IDEAS
    3. Nunes, João & Freitas, Helena, 2016. "An indicator to assess the pellet production per forest area. A case-study from Portugal," Forest Policy and Economics, Elsevier, vol. 70(C), pages 99-105.
    4. Apergis, Nicholas & Payne, James E. & Menyah, Kojo & Wolde-Rufael, Yemane, 2010. "On the causal dynamics between emissions, nuclear energy, renewable energy, and economic growth," Ecological Economics, Elsevier, vol. 69(11), pages 2255-2260, September.
    5. Liao, Shu-Yi & Tseng, Wei-Chun & Chen, Chi-Chung, 2010. "Eliciting public preference for nuclear energy against the backdrop of global warming," Energy Policy, Elsevier, vol. 38(11), pages 7054-7069, November.
    6. Xavier Labandeira & Baltazar Manzano, 2012. "Some Economic Aspects of Energy Security," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 47-64.
    7. Shahbaz, Muhammad & Zeshan, Muhammad & Afza, Talat, 2012. "Is energy consumption effective to spur economic growth in Pakistan? New evidence from bounds test to level relationships and Granger causality tests," Economic Modelling, Elsevier, vol. 29(6), pages 2310-2319.
    8. Berk, Istemi & Schulte, Simon, 2017. "Turkey's Role in Natural Gas - Becoming a Transit Country?," EWI Working Papers 2017-1, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI), revised 27 Jan 2017.
    9. Santos, Sérgio F. & Fitiwi, Desta Z. & Cruz, Marco R.M. & Cabrita, Carlos M.P. & Catalão, João P.S., 2017. "Impacts of optimal energy storage deployment and network reconfiguration on renewable integration level in distribution systems," Applied Energy, Elsevier, vol. 185(P1), pages 44-55.
    10. repec:eee:enepol:v:115:y:2018:i:c:p:426-433 is not listed on IDEAS
    11. Monteiro, Eliseu & Mantha, Vishveshwar & Rouboa, Abel, 2012. "Portuguese pellets market: Analysis of the production and utilization constrains," Energy Policy, Elsevier, vol. 42(C), pages 129-135.
    12. repec:eee:rensus:v:82:y:2018:i:p3:p:2365-2378 is not listed on IDEAS
    13. Månsson, André & Sanches-Pereira, Alessandro & Hermann, Sebastian, 2014. "Biofuels for road transport: Analysing evolving supply chains in Sweden from an energy security perspective," Applied Energy, Elsevier, vol. 123(C), pages 349-357.
    14. repec:ers:journl:v:xv:y:2012:i:sie:p:47-64 is not listed on IDEAS
    15. repec:eee:enepol:v:115:y:2018:i:c:p:456-469 is not listed on IDEAS
    16. Sivek, Martin & Kavina, Pavel & Jirásek, Jakub, 2011. "European Union and the formation of its initiative in energy minerals," Energy Policy, Elsevier, vol. 39(9), pages 5535-5540, September.
    17. Menyah, Kojo & Wolde-Rufael, Yemane, 2010. "CO2 emissions, nuclear energy, renewable energy and economic growth in the US," Energy Policy, Elsevier, vol. 38(6), pages 2911-2915, June.
    18. Beccue, Phillip C. & Huntington, Hillard G. & Leiby, Paul N. & Vincent, Kenneth R., 2018. "An updated assessment of oil market disruption risks," Energy Policy, Elsevier, vol. 115(C), pages 456-469.
    19. Baltasar Manzano & Luis Rey, 2012. "The Welfare Cost of Energy Insecurity," Working Papers fa07-2012, Economics for Energy.
    20. Månsson, André & Johansson, Bengt & Nilsson, Lars J., 2014. "Assessing energy security: An overview of commonly used methodologies," Energy, Elsevier, vol. 73(C), pages 1-14.
    21. Johansson, Bengt, 2013. "A broadened typology on energy and security," Energy, Elsevier, vol. 53(C), pages 199-205.

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