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A Note on Saudi Arabian Price Discrimination

Ronald Soligo and Amy Myers Jaffe

Year: 2000
Volume: Volume21
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol21-No1-6
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Abstract:
Despite the development of an international market for crude petroleum and the resulting opportunities for arbitrage, Saudi oil continues to be shipped to markets in the U.S. and Europe when closer markets are available. Furthermore, these Western sales take place at fob (Saudi Arabia) prices that are lower than for exports to customers in the Far East. This note explains these Saudi price and trade flow anomalies in terms of a model of constrained price discrimination in which the quality adjusted price differential between Asian and European prices cannot exceed the differential in tanker rates to the two markets. The conditions under which price discrimination is likely to continue are also explored. The focus is on the West European and Far East oil markets but the argument applies to the U.S. market as well. Implications of Saudi marketing practices for new oil producers such as those in Central Asia are also discussed.



Geospatial, Temporal and Economic Analysis of Alternative Fuel Infrastructure: The case of freight and U.S. natural gas markets

Yueyue Fan, Allen Lee, Nathan Parker, Daniel Scheitrum, Rosa Dominguez-Faus, Amy Myers Jaffe, and Kenneth Medlock III

Year: 2017
Volume: Volume 38
Number: Number 6
DOI: 10.5547/01956574.38.6.yfan
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Abstract:
The transition to low-carbon fuel in the United States has spatial, temporal and economic aspects. Much of the economic literature on this topic has focused on aspects of the cost effectiveness of competing fuels. We expand this literature by simultaneously considering spatial, temporal and economic aspects in an optimization framework that integrates geographic information system (GIS) tools, network analysis, technology choice pathways and a vehicle demand choice model. We focus on natural gas fuel as a low-carbon alternative to oil-based diesel fuel in the heavy-duty sector primarily because of the recent cost benefits relative to diesel fuel and the high vehicle turnover rate in heavy-duty trucks. We find that the level of profitability of natural gas fueling infrastructure depends more on volume of traffic flows rather than proximity to natural gas supply.





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