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Elasticity of demand for relative petroleum inventory in the short run

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  • Michael Ye
  • John Zyren
  • Joanne Shore

Abstract

To better understand petroleum markets, the authors established the importance of the deviation of inventory levels away from a normal level, where the normal level is comprised of seasonal movement and a general trend. Since supply and demand for petroleum are less elastic to price in the short run than is inventory, it is this deviation or relative inventory level that plays the role of absorbing unexpected shifts in demand and supply. They demonstrated theoretically that the demand for relative inventory must be negatively related to price. They estimated the relative inventory levels and associated short-run price elasticity for several OECD countries and groups of countries, and found that short-run price elasticity of demand for relative inventory is negative and statistically significant, supporting the theoretical arguments. Copyright International Atlantic Economic Society 2003

Suggested Citation

  • Michael Ye & John Zyren & Joanne Shore, 2003. "Elasticity of demand for relative petroleum inventory in the short run," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 31(1), pages 87-102, March.
    • Handle: RePEc:kap:atlecj:v:31:y:2003:i:1:p:87-102
    DOI: 10.1007/BF02298465
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    References listed on IDEAS

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    Cited by:

    1. Scheitrum, Daniel Paul & Carter, Colin A. & Jaffe, Amy Myers, 2017. "Testing substitution between private and public storage in the U.S. oil market: A study on the U.S. Strategic Petroleum Reserve," Energy Economics, Elsevier, vol. 64(C), pages 483-493.
    2. Michal RUBASZEK, 2010. "The Role of Two Interest Rates in the Intertemporal CA Model," EcoMod2010 259600145, EcoMod.
    3. Hull, Bradley, 2005. "Industry Issue Paper: Oil Pipeline Markets and Operations," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 44(2).
    4. Zhou, Zhong-bing & Dong, Xiu-cheng, 2012. "Analysis about the seasonality of China's crude oil import based on X-12-ARIMA," Energy, Elsevier, vol. 42(1), pages 281-288.
    5. Ye, Michael & Zyren, John & Shore, Joanne, 2005. "A monthly crude oil spot price forecasting model using relative inventories," International Journal of Forecasting, Elsevier, vol. 21(3), pages 491-501.
    6. Hull, Bradley, 2005. "Oil Pipeline Markets And Operations," 46th Annual Transportation Research Forum, Washington, D.C., March 6-8, 2005 208188, Transportation Research Forum.
    7. Ye, Michael & Zyren, John & Shore, Joanne, 2006. "Forecasting short-run crude oil price using high- and low-inventory variables," Energy Policy, Elsevier, vol. 34(17), pages 2736-2743, November.

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