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The Economic Cost of Unsupplied Diesel Product in Korea Using Input-Output Analysis

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  • Myunghwan Kim

    () (Department of Energy Policy, Graduate School of Energy & Environment, Seoul National University of Science & Technology, 232 Gongreung-Ro, Nowon-Gu, Seoul 139-743, Korea)

  • Seung-Hoon Yoo

    () (Department of Energy Policy, Graduate School of Energy & Environment, Seoul National University of Science & Technology, 232 Gongreung-Ro, Nowon-Gu, Seoul 139-743, Korea)

Abstract

Diesel is an essential factor in industrial production and development, and thus its stable supply is a crucial element for economic growth. The supply shortage of diesel has massive economic costs, namely supply shortage costs. This paper attempts to apply input-output (I-O) analysis to measuring the supply shortage cost of industrial diesel in Korea by finding an optimal way of allocating the limited diesel resources to different sectors according to the objective of maximizing overall value-added. To this end, a static I-O framework is presented using a recently published I-O table. The results indicate that the marginal cost of unsupplied diesel ranges from KRW 716 (USD 0.65) to KRW 113,376 (USD 103.07) per liter and these costs depend not only on the shortage rate of each non-diesel sector but also on the level of its own final demand. The quantitative results are useful for policy-makers to set economic reliability standards, develop optimum curtailment levels and priorities, and plan curtailment strategies for diesel supply and demand.

Suggested Citation

  • Myunghwan Kim & Seung-Hoon Yoo, 2012. "The Economic Cost of Unsupplied Diesel Product in Korea Using Input-Output Analysis," Energies, MDPI, Open Access Journal, vol. 5(9), pages 1-14, September.
  • Handle: RePEc:gam:jeners:v:5:y:2012:i:9:p:3465-3478:d:19902
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    References listed on IDEAS

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    Cited by:

    1. Chopra, Shauhrat S. & Khanna, Vikas, 2015. "Interconnectedness and interdependencies of critical infrastructures in the US economy: Implications for resilience," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 436(C), pages 865-877.

    More about this item

    Keywords

    diesel; supply shortage cost; marginal cost; input-output analysis; Korea;

    JEL classification:

    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q49 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Other

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